The importance of getting an early start on tax season strategies is widely known among those working at debt collection agencies. Companies looking to outsource their collection efforts, however, may be surprised to learn that autumn is the best time to launch a program in order to recover the maximize amount of outstanding debt the following spring.
In early December, the IRS will announce the official date (usually late January) it begins processing electronic tax returns and that is the recommended deadline for having tax season strategies in place.
Companies wanting to outsource collections should be aware that agencies need a four-to-six-week window to onboard new clients before generating favorable returns on investment. Consequently, now is the time to compare and contrast proposals from best-in-class agencies and ultimately hire one to handle collection efforts. Ideally, those agencies would be in the early stages of onboarding their new clients when the IRS makes its announcement, but there is some cushion for companies starting late.
The Rewards of Starting Early
Individuals directing collection efforts understand the rewards of having a plan in place prior to and during tax season. With enough preparation time, their tax season strategies evolve with each passing month, from November to April.
For example, early stage tax season strategies may entail directing consumer relations representatives to only discuss tax refunds if and when debtors introduce the idea. An October or November phone strategy would prompt a casual response that escalates with each passing month:
“Applying next year’s tax refund to your debt sounds great, but we need to agree on a repayment plan right now to prevent you from falling deeper into debt;”
or in January:
“Applying the large refund you expect in May is wonderful, but you don’t want to add four more months of debt onto your already large balance. Can we agree to do something now?”
That strategy should be applied through February and might be underlined by a letter campaign (February through April) advising consumers to apply their tax refund to the repayment of debt.
Directors of collection operations generally integrate tax season strategies into the ongoing phone and letter campaigns of existing clients and can advise new clients on the best practices for starting tax season strategies that overlap with master collection strategies.
The Leadership Behind Tax Season Strategies
The importance of having experienced operations leaders to direct tax season strategies and beyond cannot be overemphasized.
Areas of responsibility include generating individualized collection strategies for each client and designing internal training modules controlling tasks such as workflows, scrubs, skip tracing and compliant phone campaigns.
They also conduct a variety of operations tasks including the creation of numerous daily reports (e.g. Inventory, Batch Performance, Pool Performance, Dialer Activity and Overall KPI), random call monitoring, internal phone conferences, client meetings, and the never-ending monitoring of strategic predictive analytics that integrate data mining, text analytics, collection scoring and risk scoring models, segmentations and simulations, cost-benefit analysis, compliance and more.
Furthermore, individual collection strategies receive regular review while economic trends affecting consumer debt are always entered into consideration.
Directors of collection operations also oversee the documentation of all interactions with clients and debtors such as compliant phone and letter campaigns. Correspondence with consumers is housed in the receivables management software where precise documentation can be verified before pursuing legal collection action against debtors.
Other Factors Needed for Successful Tax Season Strategies
Best-in-class debt collection agencies offer a framework of experience in financial services; compliance with federal, state and city laws relevant to debt collections; certification such as SOC I Type II audited financial reporting and a Professional Practices Management System (PPMS) by ACA International; data protection (e.g. Payment Card Industry Data Security Standard PCI DSS 3.2); technology (e.g. customizable collection software, telephony hardware and automated dialing software) and more before they begin rolling out tax season strategies.
Agencies should also:
- Understand the differences between consumer debt and commercial debt.
- Offer convenient repayment options.
- Aaccept payments by mail and phone.
- Take multiple payment methods.
- Maintain compliant procedures to secure, authorize, monitor and process transactions.
Optio’s Best-in-Class Approach
The management team of Optio Solutions has approximately 150 years of combined management experience, including two individuals with considerable time spent overseeing operations.
That experience is framed by a foundation of compliance, quality assurance, certification, data security, collections technology and more. Optio is one of only 57 agencies worldwide to currently hold PPMS certification from ACA International. All of these factors help delivery a favorable return on investment, brand protection and customer retention.
Contact us today to discuss how we can create an individualized collections strategy for your organization that begins this fall with a sound tax season campaign.