5 Cores of Buying Collection Software

September 2010

You’ve got your budget, you’ve got your buying criteria and you made the decision; “I need new software.”  That very statement may strike fear into many agencies that will at some point in the near future be moving all of their data from one system to another, getting their collectors trained and wondering did I make the right decision. Relax, it isn’t that bad.  Here are five Cores that may help you mitigate some of that uneasiness when looking to buy a new piece of collection software.

The first Core and probably the most important and most overlooked is process. Does the software vendor have a process in place to migrate, train, customize and service you as you ramp from new client to an ongoing concern. In order for your software vendor to seamlessly migrate you from your current system to theirs they must be able to help you understand what you should expect from the process.  Software vendors who have clearly defined processes in place on how to walk through these stages of development clearly have the advantage. The main reason is that they will always be able to tell the agency what they need to do, what is done and how long it will be until the project is completed.  Now for start-ups or new companies with simple flat files this process is relatively simple because there isn’t any legacy translation or payment history that needs to be accounted for in the new system.  Migrating all of your legacy data is key and you should not leave any behind, ever. Your new system at launch needs to reflect the exacting reporting, remit information, commissions and other client information so that your client base doesn’t even realize that you’ve changed systems. You don’t want to run the same report from each of your systems and get a different result.  The software vendor must have a clearly defined migration process in place. If they do not, move on. This process should be looked at first so that accountability between software vendor and agency are clearly defined from start to finish.  A typical install should be map it, test it and launch it. One of the key things with this is that you don’t want to shock your collectors with new terms and phrases.They will be a little overwhelmed as it is so this “mapping of terms” process will make the transition a lot smoother. In the mapping of the accounts you must also map the wording and use of terms from the old system to the new system. Your software vendor must be able to do this and this is critical for gaining collectors support of the system. A simple example of this would be your current system uses the term “ABC” to indentify skip accounts. Your current system should use this same ABC identifier to shorten the overall learning curve in the new system.  This simple change will make collectors more at ease and they will need less training on how the new system works. On average simple changes like this can increase the efficiency of collectors by over 70% versus having to learn a new idiom.

The second Core is knowing that the software vendor will be able to support you through your entire technology support cycle.  There are three basic support tiers, the first is Pre-launch, the second is the Go-Live and the last is ongoing support.  Ensuring that your software vendor, its developers and customer service agents will be able to move through these processes is key.  Pre-Launch is not the most critical of a complete launch stage but it is important to define and separate the pre-launch from the Go-live support and here is why. The Pre-launch is one of the most dynamic and fluid of the stages because there are several moving parts that a software company needs to be aware of. The first is the current system and how it functions today, the second is the customization that the agency needs to make to meet their new clients specialized needs and third is the ever changing environment of how the system looks and functions day to day.  In the pre-launch your software vendor needs to begin the training of your collectors, managers and in some cases clients and vendors.  The purpose of this is to get the new collectors familiar with the navigation so that they will be more familiar with the system at launch. Your collection software company needs to be involved and available through this pre-launch set up and implementation.  During the next stage the go-live stage you need your software vendor to be incredibly hands on and available. The first two weeks from the Go-Live date are sometimes overwhelming and hand holding and online meeting software will be the help mitigate the uneasiness of a new systems bells and whistles. Even with all the mapping done correctly, the customization complete and the training behind you the day you shut your legacy system off and turn your new system on is stressful because you are now committed to your brave new world.  The software vendor needs to answer your calls, explain thoroughly how they can help you address any issue you are having and that vendor should follow up. The follow up is important because it builds that critical underlying hand shake that they are there for you. It is designed to put the agency at ease knowing that they paid good money and were left without a trusted advisor to guide them the rest of the way.  The ongoing support should simply mean that the software firm is proactive with training and suggestions on how to better use their system.  A weekly call from customer service to ask about training or new employees could go a long way for both collection agency and software provider to make sure that exceptions are met.

The third Core deals with the single most misunderstood and misused term not only in the collection software industry but in the software industry as a whole.  There is only one way to integrate your collection software with a third party interface yet there seems to be two ways that this is defined, for the record there is only one way.  The first non integrated or what is called the “So Called” integration model deals with a Query of data agasint your collection system, the choosing of accounts, converting them to flat file and then sending them Via email or FTP to your vendor of choice who uploads your file, runs some action against your data and then returns it.  You receive your file; upload it to your system and move on to your next project. Just writing that seemed more involved than it needed to be so imagine the problems with actually doing it and remembering all the steps. True integrated collection systems do all that through either stored procedure in your system or through a single button that manages all of that process.  The integrated collection system then talks to some type of XML or other standardized gateway and seamlessly passes data back and forth between the two until the task is completed. Now this is integration the way it should be. This is transparent to the users, seamless to the information hub and the return data is uploaded into the systems for viewing.  The perfect collection system should place your agency as the hub communicating at will to any number of support vendors and clients in as seamless a process as possible.  One click is all you will need when your software is truly integrated.  

The fourth Core is customization, making the system your own. Customization serves two key purposes. The first is making it better for your own collection team and the second is meeting the demands of your clients. Typically clients call for far more customization than any employee and knowing this is critical to finding the right software architecture to meet those demands.  Customization in too many cases is like an auto repair gone bad. You go in with a flat tire and come out with a new engine and a $5,000 bill.  Your software company prior to customizing your software needs to first understand your particular company and its processes and then build custom modules around that. If you find yourself wondering what your developer means when he says,” we will run an SQL command to make that happen” you are with the wrong firm.  A true technologist, a true services company that sells niche based software should be more familiar with your industry and your needs. To help you customize your system your provider should ask simple questions such as, how would you like to take a payment, or outsource an account or create a dialer campaign. The consumer, you, your agency shouldn’t care about the technology per se but should care about making your agency more efficient, finding ways to eliminate paper processes and clerical support and finding ways to make one more call every day and growing your business not your technology background in the coming years.

The fifth Core is reporting, which for any collection system is separated into two areas. The first is standardized reports and the second is the more customized client specific reports that must meet specific client needs of higher touch outsource clients. Any good collection software system will have three standard reporting modules built into their system. The first is contingency based reporting which should have the basics like money due client and money due agency. The second standard report should focus on purchased paper and give you a profitability number and a percentage cost to dollar collected ratio. These two costing elements will help you understand how the paper is performing per dollar collected. The third report is a basic collection report and  should include both contingency and purchased paper  and give you overall collections by dates, employees and paper types. These standardized reports are good to start with and for many small agencies will meet all of the demands of that agency but for larger agencies these standardized reports may not meet all of your demands. These larger agencies need  more dynamic and more expansive reports which can only be accomplished through completely customized reporting.  The customized reporting modules allow agencies to dictate how a Greenfield report should function and what it should look like.  A true customized report should allow for complex math calculations, cross portfolio analysis and asset class scoring and it shouldn’t stop there. It should allow you, without limitations, the ability to make the report meet your needs.

If you take these five Cores into account before you spend your hard earned money on a new collection software system it will eliminate the problems associated with implementing your new collection system.  One of the last things is to be cognizant of the soft cost of implementations, not just what you pay for but the opportunity cost of not doing things today.  The opportunity costs; that time you take mired in the decision making process can ultimately be the most costly expense of moving to a new system.  When you know you need a new system, make a wish list of how the system should work, start interviewing vendors, view their demos and get your staff involved. Getting the staff involved may give you insight into things about collection software that you may not have thought of. Bottom line ,somewhere out there is your perfect software system waiting to make you more effective, efficient and make you more money.

Marc Campisi is COO of ICEware Software a collection software and service company based out of Northport, NY.  Marc has been in the software industry for over 15 years and has developed everything from trading applications to mobile medical applications to financial management systems. Marc has expertise in web based technologies, internet based security and wireless development. ICEware is custom software provider specializing in Zero foot print browser based software for the ARM and loan origination industries.