Types of Collection Agency (2)

1. First Party Agency subsidiaries of the

original company the debt is owed to., part
of the original creditor.
(Second Party refers to the consumer
or debtor)
2.Third Party Agency not a party to the
original contract.
- accept payment on a contingencyfee basis (a payment received upon
completion or collection of debt)
Accepting payments by Collection
Agency depends on the Individual Level of
Agreement (SLA) that exists between the
creditor and the collectio agency:
1. takes percentage of debts successfully
collected known as Pot Fee (Potential
Payment).
2. makes money only if money is collected
from the debtor known as no collection no
fee basis., the fee could range from 10
50%, though typically the fee is 25% - 40%.
Accounts
Receivable
Management
(ARM)
- Master Servicing Fees may range from
4 6% of gross collections in addition
to collection agency fees.
SKIP TRACING or debtor & fugitive
recovery
- A process of locating a persons where
abouts for any number of purposes.
Skip Tracer someone who performs this
task.
Skip the person being searched for., it
derives from the idiomatic expression to
skip down, meaning to depart (perhaps in
a rush) leaving minimal clues behind to
trace the skip to a new location.
- skip takes place in the collection
inductry when the contact information
on an account is no longer valid.
- Skip tracing uses the information
provided with the application credit

(borrowers name, address, place of

employment or any references)
Technology for Collection
Automated Collection Technology (ACT)
the focuses is on the lenders collection
process, not necessarily the repossession
and recovery process. The goal of these
systems is to keep the customer making
their payments throughout the life of the
loan, thereby decreasing the lenders
delinquency rates and making it easier to
identify troubled accounts. By improving the
collection process, the lender can benefit
from improved cash flow, lower overhead
and widen its lending criteria.
Specially,
these
devices
work
proactively, before an account becomes
troubled.
Devices
typically
work
in
conjunction with the customers payment
schedule, programming the device each time
a payment is made. If a payment is missed,
the device will automatically send warnings
to customer, reminding them their payment
is due.
Quiz!
1.) What are the ten practices that can be
used by institutions to improve their billing
process?
2.) What is pot fee; contingency-fee
basis?
3.) Differentiate First Party Agencies from
Third Party Agencies.
4.) Briefly discuss what ACT is?
5.) What do you mean by Individual Level of
Agreement?
Note: You can pass it via email
rivera_jebeth@yahoo.com
(yahoo/fb)
personally on Saturday (feb.28, 2015)
FINAL EXAM from Customer Billing
onwards.

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