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Ideas for Today and Tomorrow Taking Collections in a New Direction.

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Presentation on theme: "Ideas for Today and Tomorrow Taking Collections in a New Direction."— Presentation transcript:

1 Ideas for Today and Tomorrow Taking Collections in a New Direction

2 Best Practices in Managing Receivables Retention, Receivables and Repercussions

3 Number 1 item on the agenda for everyone at the school Retention Committee Who is responsible? Why is the student leaving? Academic Social Financial How do we intercept and change their mind? Retention

4 Much of what we do with receivables is done at the back end or after accounts are in default. The focus of today’s discussion is what we can do on the front end to facilitate student payment and reduce additional debt. From the Beginning

5 #1 Item of Discussion at Conferences, Offices, and List serves What is your preferred method of staying in touch with your students? Email and Snail Mail Social Networking Applications Facebook, Wikis, Blogs, Twitter Have you involved students in designing your methods of communication Communication

6 Social Networking Applications Social Networking Applications Student Account Applications Student Account Applications Contact with Student Contact with Student Links to School Website/Billing Information Links to School Website/Billing Information Notices Notices Information on Entrance and Exit Interviews Information on Entrance and Exit Interviews Skip Tracing Skip Tracing Communication

7 Using Smartphones to Make payments Register for classes Access billing statements Entrance/Exit counseling Make payments to Collection Agencies The Next Generation of Technology Communication

8 Billing Responsibility to Pay Statement with signature Permission to contact by cell phone Promissory Note Cost What is included? Is each item clearly defined? Focusing On Processes and Procedures

9 The Bill What information is included? Is the statement easy to understand and designed for the student? What information is available online? How do we insure that the student fully understands all of the terms and conditions? Was there student input when the statement was designed? Focusing On Processes and Procedures

10 Options for Payment Are all methods of payment clearly noted and defined? Can students make payments online or have their payments taken directly from their accounts? How about debiting their parent’s account? What about credit cards? How is the fee covered? Focusing On Processes and Procedures

11 Are there payment options not discussed in the billing statement? How are payments from International students handled? Are there outsourcing options? Billing or use of credit cards? Which is better electronic statements or paper statements? To which do the students better respond? Focusing On Processes and Procedures

12 What types of payment plans are offered? 8 month, 5 month, 4 month, 3 month 8 month, 5 month, 4 month, 3 month 1/3 down with an additional two payments 1/3 down with an additional two payments Are all costs included in the payment plan? Are all costs included in the payment plan? Are students required to have a zero balance before they can attend? Are students required to have a zero balance before they can attend? How does the system monitor the payments? How does the system monitor the payments? Focusing On Processes and Procedures

13 Cash Payment Monitoring Cash Payment Monitoring Cut off dates Cut off dates What is done prior to cut off date? What is done prior to cut off date? Reminders of deadlines Reminders of deadlines Telephone calls at 30, 20, 15, 10 days prior to payment deadline Telephone calls at 30, 20, 15, 10 days prior to payment deadline Emails (30, 20, 15, 10 days) indicating urgency in payment – anyone thought about texting? Emails (30, 20, 15, 10 days) indicating urgency in payment – anyone thought about texting? Reports to Admissions and Financial Aid Offices Reports to Admissions and Financial Aid Offices Best Practices

14 System Reports If billing is 90 days out why not have a 60 and 30 day report indicating those that have not made payment If billing is 90 days out why not have a 60 and 30 day report indicating those that have not made payment At 30 days does the system have the ability to generate notices (mail) or emails or text messages At 30 days does the system have the ability to generate notices (mail) or emails or text messages Notices generated again at 20, 15, and 10 days Notices generated again at 20, 15, and 10 days This type of monitoring also gives you better data for forecasting cash and student population This type of monitoring also gives you better data for forecasting cash and student population Internal Controls

15 Get started on introducing a financial literacy program on your campus Communicate with the campus to let them know what student needs to do what Survey students to see if they are using the information that is provided Make sure that the administration is on board with all of the plans to reduce receivables Make the case to everyone that what you do affects the entire campus – Students, Faculty and Staff Getting the News Out

16 FDCPA Leaving messages Third Party Disclosures Disputes and Debt Validation TCPA Financial Responsibility Statement Become Knowledgeable

17 CFPB Statute of Limitations and Time Barred Debt Collection Cost/Contingency Fee Choice of Law Become Knowledgeable

18 Credit Bureau Reporting Return to Title IV Bankruptcy DOE VA Become Knowledgeable

19 Make sure that you have a contract on file If they are doing ACH, then have a copy of the ACH form you complete If they are collecting Title IV funds have a copy of the Attestation Audit on hand Ask for a copy of their financial statements or their fiscal audit Ask for a copy of their insurance certificates Know Your Vendors

20 Bradley v. Franklin Collection Services, Inc. In a January 2, 2014, ruling, the Eleventh Circuit Court of Appeals found that a collection agency may not collect a fee based on a percentage of the account balance if the original contract between the consumer and creditor did not specify the consumer would be responsible for a percentage based fee. In the case the consumer had signed a patient agreement when receiving medical treatment that stated, “In the event of nonpayment…I agree to pay all costs of collection, including a reasonable attorney’s fee…” The creditor added 33 1/3 percent before forwarding the account to the collection agency. New Alert News Alert News Alert

21 The court ruled that the plaintiff, “agreed to pay the actual costs of collection; his contractual agreement did not require him to pay a collection agency’s percentage-based fee where that fee did not correlate to the costs of collection.” The court found that the percentage-based fee, assessed before the collection agency’s attempt to collect, was not related to the agency’s actual cost of collection, thus breaching the agreement between the consumer and the creditor. Therefore, the court held that the collection agency violated the FDCPA by collecting the 33 1/3 percent fee when the consumer only agreed to pay the actual costs of collection. News Alert News Alert News Alert

22 What does all of this mean to me? Do you add collection cost (fee charged by the agency to collect the balance) to the balance that is sent to the agency? What is the wording that you have in your contract indicating to the student that they will be responsible for collection cost? News Alert News Alert News Alert

23 Talk with your corporate counsel about this decision and how they think it will impact you. If you are going to add the contingency fee, then you need to be explicit as far as what fees are going to be added to the balance when being placed with a collection agency. i.e. …agency fees of up to 50% shall be added… Make sure that you are making the student aware of all potential costs to them when they default. Make sure that all policies and procedures are written down and available to auditors (examiners). New Alert News Alert News Alert

24 Micheal Kahler Vice President, Key 2 Recovery 5448 West Chester Road West Chester, OH 45069 314-420-4876 888-402-5392 mkahler@key2recovery.com www.key2recovery.com Questions

25 “We were looking to shake things up by bringing on a new agency with the hopes that the performance from all of our collection companies would improve. We placed a few accounts with Key 2 as a test and they collected 76.7% of the dollars and average 37.6% across all first referrals, outperforming all of my other agencies. Now they receive a majority of our accounts.” -Ed Hendricks, Walsh University, Canton OH “Key 2 was selected through an RFP process at MSU. Key 2’s first placement after the contract award was a portfolio of 28 accounts that had already been through most of our other agencies and were closed as “uncollectable”. In the first couple of months they had found 26 of the accounts and ultimately collected 16.9% of the principal on those third and fourth referrals.” -Tina McWain, Morehead State University, Morehead KY What Clients Have To Say

26 “I have been in the education industry for over fifteen years and worked with several collection agencies to collect delinquent student receivables. I was familiar with Key 2 from a prior institution and was very impressed with their performance and fantastic collection rates. When I came to Ellis University, I quickly hired them to collect our delinquent receivables as well. They generated payments immediately and it’s clear from using Key 2 at two different institutions that Key 2 works hard on every account. Currently, Key 2 averages 26.5% across all first placements and collected approximately a quarter of a million dollars for us in less than a year. I have used at least a dozen different agencies in my career, both large and small, and none of them have compared to the results from Key 2. “ -Randy Willy, John Hancock University, Chicago IL What Clients Have To Say

27 “We have been very pleased with Key 2’s performance on our newer accounts. I had files of older student receivables that had been written off, some going back 20+ years. So when Key 2 showed interest in collecting those I seized the opportunity to run a report and place those with them as well to see what they could do. They collected over 1% in the first 60 days. I am amazed that they consistently find and collect on some of the accounts they do, even those going back to the early 90’s.” -Sandy Saggars, Goshen College, Goshen IN What Clients Have To Say

28 “In my nineteen years at a higher education institution, I have encountered many sales people. They come to me to sell their product, bragging that it’s the best in the industry, citing excellent performance in their line of service. I finally get sold on their product, and never hear from the sales person again, leaving me only to deal with the CSR, which is fine. But my biggest, best impression with Key 2 is the communication I receive from both Doug Plummer and Steve Roberto. Neither hesitate to pick up the phone to call me on an issue, or shoot me an email. It lets me know that I’m not a forgotten “old sock”. Not to mention the fact that their collection efforts are the best I’ve seen, collecting on accounts, some being ten years old. I would definitely, with highest regards, recommend them to any company.” -Sheryl Brady, Stephens College, Columbia MO What Clients Have To Say

29 Our Key2 philosophy is this: Bring exceptional customer service to the table every day, don’t just say you’ll treat the borrower with respect but really do it, and quickly determine the borrower’s ability and willingness to repay and arrange a creative and attainable payment plan that will be met on-time and completed. These are the “Keys to Recovery”. Philosophy


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