“Tactics is knowing what to do when there is something to do; strategy is knowing what to do when there is nothing to do.” - Savielly Tartakower, International Chess Grandmaster.
Many of those in the accounts receivable management industry today find themselves looking to deploy the right tactics to respond to several seismic shifts that have occurred in recent months: the deployment of remote workforces in response to the COVID-19 pandemic, responding to the Consumer Financial Protection Bureau’s (CFPB) debt collection rule and whether new leadership atop the Bureau will alter what has already been released, and rapid advancements in technology that are revamping how collection agencies operate. Each of these situations requires companies to make substantial, business-critical decisions that will likely affect their future.
Developing a strategy during a period of uncertainty can feel like trying to hit a moving target. You don’t want to waste time building a plan only to have it change as soon as you launch it. But the longer you wait for the clouds to part and an exact direction to be laid out before you, the longer you live in limbo, and that is just not a viable option for a company of any size at this time in our history.
Like in a chess match, decisions have to be made, and pieces have to be moved before time runs out, ideally planned out well in advance yet able to respond to changing dynamics. Not making a move results in time running out and you losing the game.
Three giant factors - COVID, the CFPB, and new industry tech - have changed the accounts receivable business landscape significantly. What's your next move? Your strategy should adapt. Here's how.
1. Plan for permanent WFH
The extended impact of the COVID-19 pandemic is that employees will work from home for a long time. The latest numbers show that it will take at least eleven months to get the United States to the level of herd immunity. Humanity will take closer to seven years to get to the same level. Seeing numbers like this it is easy to believe things will never go back to the way they used to be. Companies did a great job of pivoting a year ago to be able to support employees working from home, but the expectation was that this would be a short-term blip on the radar. The reality is that this is not going to be a blip. People will be working remotely for years to come, if not for decades.
Not working on this now is the equivalent of giving your competition multiple moves. Done right, organizations will be able to reduce their costs, build in flexibility, increase productivity, resulting in increased profits that can be fed back into the decisioning cycle, increasing the profit gap between you and your competitors. Taken to an extreme an organization that increases efficiency enough could decide to reduce their fees, gain market share, and still be as or more profitable. Checkmate!
Today we should be developing business plans that incorporate the remote work dynamic and making decisions that reflect those changes, such as: the need for new policies and procedures to cover remote workers, dramatically reducing office space, hiring and training, equipment returns, and the impact on company culture.
2. Don't wait - prepare for the CFPB’s new rule now
Like in chess, companies can’t make one move at a time in a vacuum. Moves need to be thought out in advance and made in a coordinated fashion if they are to be effective.
Planning ahead is exactly how companies should be addressing compliance with the CFPB’s debt collection rule. There may be more than nine months before the rule’s provisions are scheduled to go into effect and there are legitimate concerns that the new leadership of the agency may choose not to move forward with the rule’s release or make changes to the rule before it goes into effect. Taking a wait-and-see approach may feel like the right move, but there are so many changes to be made that waiting too long may make it impossible to get them all done in time. If a company needs to work with a software provider or technology vendor to make changes to their processes, those companies may need to get in a long line. We may already be running short on time and the time for action is upon us.
Here is what we know, the new CFPB has set the minimum requirements that need to be in place by November 30, 2021. What is your plan to ingest, digest, and implement these requirements? Good program management is crucial and starts with gathering the list of requirements. Next come timelines, resources, organization buy-in, and focused action with measurable results. We are not done.
Once we get all these things done we need to prepare for alternative regulatory changes. Worst case scenario planning is a great place to start. Get the team together to figure out how would your organization handle call caps of three a week, needing email consent given directly to the agency, Bill of Rights notices in every communication with the consumer, and substantiation requirements prior to reaching out a consumer to name a few. This makes you want to give up the game altogether. Knowing how you can respond to each of these gives you moves others will not be able to think of if they are thinking of them for the first time.
3. New tech is giving your competitors a big advantage
Being too late to the party is something that is going to happen to many collection agencies when it comes to the rapid technological advancements that are being made in the industry today. Companies that have been too reluctant to consider technologies like text messaging, voicemail drops, machine learning, speech analytics, and data analysis are giving their competitors a huge — and unnecessary — competitive advantage. Waiting for things to go back to the way they were is as bad an idea here as if you ignore remote workforces and complying with the CFPB’s rule. This calls to mind another quote from Tartakower: “The move is there, but you must see it.”
The impact that technology is having on the ARM industry should not come as a surprise to anyone. It has been clear for years that technology was going to become the engine that drives efficiency and productivity for the industry for the next generation and the generation after that.
How many companies do you know that were successful that never made a move or were slow to move (also known as sat back and took a wait-and-see approach)? To improve is to change, but to perfect is to change often. Today’s leaders need to build plans but be ready to change them at a moment’s notice and take action. Just as in chess, when you see an opportunity, you have to act fast. If your opponent leaves his or her queen exposed, you go for it. Not taking the piece could mean the difference between winning and losing. Don’t become a cautionary tale.
Tim Collins is a 28 year veteran of the ARM industry, having served as General Counsel and Chief Compliance Officer for multiple industry-leading organizations. He is a well-known industry thought leader and innovator. This article originally appeared as part of the iA Innovation Council Think Differently series. You can read more about the Innovation Council here.
iA Strategy & Tech - a digital event for all executives involved in collections strategy for creditor firms / first-party or agencies / third-party - runs July 13-15. Get the latest on consumer communication preference and more. Learn more.