The Importance of Sound Collection Strategies within the Credit Union

Believe it or not most Credit Union Members would choose to pay their auto loan before their mortgage, or any other bill for that matter. This trend has been on the rise over the past few years, and with that being said having an effective collection strategy in place will ensure that the Credit Union can take advantage of your Member’s willingness to pay their auto loan.

Being proactive with your collection strategy is so important when it comes to having a healthy auto portfolio. Reaching out to your Members immediately upon a missed payment along with consistent follow-up is crucial for successful collections. The earlier you reach out to your Member the less likely their account will escalate to repossession. Motivate your Member so that they will want to find resolution as soon as possible, and always be educating your Members of the consequences of their delinquency. Establishing a culture of urgency with this systemic approach will affect your Member’s attitude towards making timely payments. Partnering with a third party servicer early in the collection process can make all the difference in the world. A third party calling your Member in the early stages of delinquency will get your Member’s attention which will equate to money in the door and in turn deliver a message that your account is a number one priority this month and every month.

Low delinquency is one of the best means of sustaining a sound portfolio. This applies to any size Credit Union whether it staffed by fulltime paid employees or volunteers. When a collector is able to work out a reasonable payment arrangement with the Member on a delinquent loan and that Member fails to follow through on their promise, make sure that you have a solution in place to collect on the broken promise. If a Member is unwilling to work with the Credit Union consider alternative resources such as collection agencies, lawyers, and repossession companies. If you find a spike in your delinquencies, don’t wait! Take action by either hiring more collection staff or hire outside help.