A direct correlation exists between the quality of agencies and the quality of the debt collection RFPs used to evaluate and contract them to manage accounts receivable. While it is possible to find best-in-class agencies via referrals or even subpar RFPs, companies looking to outsource their collections would be well served by using detailed RFPs offering empirical results. RFPs simplify the entire selection process and establish an even playing field for all responding agencies.
So, how does a company locate or draft quality debt collection RFPs?
There are two primary ways of securing RFPs, aka “request for proposals” — generate them from scratch or use proposal software solutions that can be customized to suit the individual needs of the issuing organization. Home-grown varieties are generally setup as Microsoft Excel spreadsheets or Microsoft Word tables, but they can be as simple as multi-page text files.
About Debt Collection RFPs
Lengths vary, but debt collection RFPs can be quite long. Those set up in Excel, for example, may have four or five sheets addressing general, functional and technical requirements as well as fees and other areas of interest to clients. Furthermore, each sheet may have dozens of rows drilling down to greater detail while the completed proposals typically contain attachments or referenced files to support specific areas (e.g. certificates, security protocols or training manuals).
RFPs should target precise goals including a successful working relationship between the parties as well as the client benefits of favorable return on investment, brand protection and customer retention.
The process begins with the creation of the RFP, then segues to gathering proposals from prospective vendors, comparing and contrasting their responses, reaching a decision, negotiating rates, and signing a contract. After selecting an agency, companies are tasked with providing them with the information that is needed to develop a detailed strategy, implement the process, and launch the campaign.
Debt collection RFPs should ask open-ended questions that demand explanation. The results should address 
the “five Ws and how of journalism” — who, what, when, where, why and how — and prompt responding agencies to paint a clear picture of themselves.
Requesting organizations should assign their best writers to the narrative portions of RFPs and have an attorney review specific sections before submission.
Part one of this two-part series covers the length and scope of RFPs, the backgrounds of the requesting and responding organizations, and the desired goals and descriptions of the debt. Part two takes a detailed look at agency operations — including collections technology, analytics and reporting — as well as compliance, quality assurance, certification, data security measures, fee structures, system implementation more.
I. Profile of the Requesting Organization
This section thoroughly describes the background of the organization needing collection services. Much of this information should already exist in the form of company descriptions used on web pages, marketing materials and press releases while addressing the firm’s mission, history, ownership/management, products and or services, target markets, customer profiles, corporate culture and important contacts. The content should be clear and concise — perhaps 200 words or less.
II. Evaluation, Expectations and Goals
This multi-tiered section begins by explaining the organization’s reasons for requesting proposals (e.g. need national reach or an experienced collection-operations director).
It should also mention the related challenges and past performance of in-house efforts:
- The length of time the company conducted its own collection operations.
- The results and the takeaways from those efforts.
- The reason for stopping.
- Will the company conduct first-party collections and ask the agency to furnish third-party services?
- Are the accounts written off prior to placement?
- Were there any data breaches or compliance failures that resulted in negative publicity?
Those same areas should be addressed to explain the performance of former vendors, and underline the significance of expectations based on previous results.
Be clear about the terms and the reach of the proposed agreement. Is the company looking for temporary help or a long-term working relationship? Is the company adding or replacing agencies to an existing core group of qualified vendors? Is the company looking for an agency with experience in consumer or commercial collections? Is it looking for an agency with industry-specific experience? Does it need help in all 50 states?
All deadlines and timelines should be precisely stated, and it would help to place the deadline (date and time) for submitting proposals on the cover pages of debt collection RFPs. Timeline sections should include deadlines for returning intent to submit responses and non-disclosure agreements.
Descriptions should include an explanation of the selection process — number of rounds and whether or not finalists will be required to participate in presentations and site visits — as well as a general explanation of how vendors will be gauged after contracts are signed.
This section should also include an itemized list or pie chart containing specific percentages that detail the priority of characteristics such as operations experience, performance history, compliance and quality assurance, data security measures, technology, and fees.
This is also a good place to explain acceptable proposal formats (e.g. the same Excel layout as the RFP versus PDFs of Excel pages) and the method of transmission such as USPS, email, FTP or file hosting service (e.g. Dropbox).
The requesting company’s preferred methods of communications should also be detailed: phone, email, FTP or a combination there of.
III. Description of the Debt
Agencies should be given a clear definition of the debt they are bidding on. In addition to the general description of the debt mentioned above (i.e. consumer versus commercial, industry or vertical, geographic reach, number of agencies, etc.), requesting companies should estimate the total dollar value of the relevant monthly/annual portfolios, the average dollar value of individual accounts, the number of accounts to be placed, and the average age of the accounts.
Agencies should also be apprised of the documentation they will be given such as credit reports or signed credit applications.
IV. Agency Profile
This section basically mirrors the content describing the background of the organization issuing the request, but it should be itemized to provide consistency and fairness among all responding agencies.
There should be separate spaces for vendors to write narratives about their firm’s mission, history, years in business, ownership, executive management, operations management, recruiting and hiring practices, important contacts, project managers, services, areas of expertise, corporate culture and community service. Some RFPs even specify required word counts for the narratives.
Furthermore, vendors should be asked to furnish the names of relevant licenses, bonds, general certifications, references, affiliations and be able to support this content with copies of documentation as needed.
Next, agencies should be asked to address several areas describing specific assets and past performance:
- The competitive advantages offered by the agency.
- The number of agency call centers.
- The hours of operation.
- The number of full-time employees (FTE).
- The ratio of supervisors to FTE.
- The availability of strategy one (demand letters) resources.
- The number of collectors who are proficient in other languages.
- The returns on investment delivered to other clients per specific aging buckets, balance size and demographics.
- The customer retention rates.
There are also dozens of technical specifications that will be addressed in part two of this series.
Part One Summary of Debt Collection RFPs
Part two of this series will review vendor management and staff, operations, compliance, data protection measures, debt collection software, reporting capabilities, fee structures and more.
For now, companies interested in debt collection agencies having a framework of experience, compliance, certification, data security, and technology should contact Optio Solutions to learn how an individualized collection strategy can generate a favorable return on investment, brand protection and customer retention.
