An effective collections system is very important in a fiercely competitive insurance market that is based on a supplier-customer model with many intermediaries. The industry also sees varying standards with different brokers working on 30, 60 or 90 day periods.
The large number of intermediaries and variations in broker arrangements make strong credit controls along with reconciliation and cash application complex to manage. In WNS's experience, 4 measures can help you rapidly create an effective collections system.
1. Use performance measurement and monitoring tools that work in real-time
A real-time performance measurement and monitoring tool works well with the changing dynamics of the collections department. For one of our clients, WNS developed a tool to map the client's Oracle-based collection platform with the credit terms of intermediaries; and interface with the insurance analytics team performing statistical extractions at the month end. The team was then able to replicate and split monthly Management Information Systems (MIS) on a per day basis by creating a visual directory that provided insights to all stakeholders.
2. Fund reconciliation activities
Timely identification and allocation or receipting of payments along with proper reconciliation and application of funds is very important in the collections world. By decentralizing cash allocation and application teams, and ensuring collaboration with banking and collections teams, unallocated and unapplied funds can be reduced. This leads to an increase in cash flow and reduction of funds in the suspense account.
3.Prepare a work ownership mode
There are different work ownership models such as Cradle-to-Grave, Delinquency-Based Ownership and ownership based on value and volume. The right ownership model should be pursued based on the client portfolio and credit control strategies.
4. Use age of debt to customize your approach
The age of debt and customer's account type should be important criteria in focusing collections efforts. Early-stage and late-stage collections should have different approaches and teams for optimal results.