While the pros and cons of the Tax Cuts and Jobs Act of 2017 continue to be debated, organizations with outstanding accounts receivable would be well served by launching a tax season strategy this fall to maximize the potential for collecting outstanding debt next spring. The IRS will announce the official start of the 2019 tax season in early December, designating the date the bureau begins processing electronic tax returns. That is the recommended target date for having a tax season strategy in place.
Two critical factors are needed to conduct an effective tax season strategy, whether companies are conducting their own collection efforts or outsourcing them to agencies:
- An accounts receivable framework of compliance, certification, data protection, collections technology and more.
- Experience in financial services, including savvy collection operations leaders.
For companies deciding to outsource, keep in mind that agencies need four-to-six weeks to setup new clients in order to deliver a favorable return on investment while maintaining brand protection and customer retention.
Timing is Everything
Experienced collection operations leaders understand that time is of the essence prior to and during tax season. Their strategy is implemented by a campaign that escalates each month during the tax season, 
from November through April.
An early season strategy may entail instructing collectors to only discuss tax refunds if and when debtors introduce the subject. For example, a November phone strategy would prompt the following collector response: “We can certainly apply the tax refund you receive in March to your debt, but we need to develop a repayment plan now to prevent you from falling deeper into debt.”
That strategy continues through February with modification as necessary, and might be augmented by a letter campaign in March and April advising consumers to apply their tax refund to the repayment of their debt.
There are considerable nuances to phone and letter strategies that are best determined by operations leaders.
The Framework of a Successful Tax Season Strategy
The recommended foundation for establishing and conducting internal or external collection efforts includes the following areas:
- Compliance with federal laws relevant to debt collections including the Fair Debt Collection Practices Act (FDCPA), Fair Credit Reporting Act (FCRA) and Telephone Consumer Protection Act (TCPA) as well as applicable state and or city laws.
- A compliance and quality assurance department led by ACA Certified Credit and Collection Compliance Officers conducting year-round training and assessment.
Certification — SOC I Type II audited financial reporting, SOC 2 Type II audited non-financial reporting, and a Professional Practices Management System (PPMS) by ACA International.- Security — Payment Card Industry Data Security Standard PCI DSS 3.2, compliance with SOC I Type II, and tight house policies such as employee background checks and drug screenings.
- Technology — collections software with customizable technology and the ability to establish and manage workflow designs. Additional technology is needed in the area of telephony hardware and automated dialing software that includes power dialers and predictive dialers to integrate with the master revenue management program.
- Convenient payment options and the ability to accept payments by mail and phone, and take multiple payment methods like cash, checks, credit and debit cards, and ACH while maintaining the proper procedures to secure, authorize, monitor and process transactions.
- Understanding consumer versus commercial debt — Collecting consumer debt relies on technological tools that track down individuals and find their correct contact information before building a relationship based on trust. Commercial debt involves communicating with decision-makers at the indebted company who are capable of authorizing repayment.
Certification — Operations Management
The above foundation is critical, but the need for having qualified operations leaders directing the tax season strategy and throughout the year is just as important. The learning curve is tremendous, so look for leaders with at least 10 years of 
experience managing call centers with fluency in compliance, strategic predictive analytics, workflow automation, monitoring individual and team collections performance, reporting, auditing and more. These individuals also track economic trends and evolving demographic behaviors affecting consumer cash flow and the ability to repay debt.
In addition, operations leaders mandate the documentation of all interactions with clients and debtors, including compliant phone calls and correspondence via letters and email. These interactions are stored electronically in the collection software where documentation can be produced before pursuing legal collection action against delinquent consumers.
Hiring a Best-in-Class Agency
Organizations deciding to outsource collection efforts should look for an agency with all of the attributes mentioned above: financial services experience, compliance, quality assurance, certification, data security, collections technology, payment options and more.
The Optio Solutions management team has approximately 150 years of combined management experience, including two individuals with considerable time spent managing operations.
Download our free guide to learn how an individualized collections strategy can help your organization this tax season and beyond.
