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© 2015 Fair Isaac Corporation. All rights reserved. 1

In the face of a challenging economic environment, reduced resources, rapidly evolving consumer technologies and a rising number of programs at the state and county level, governments need to continue searching for more efficient and effective strategies to collect debt.

It’s not unusual for agencies collecting debt to struggle with competing priorities and challenges across the collection and recovery lifecycle. And the process has only become more complicated with growing under-employment and stagnant employment levels, small internal staffs and changing constituent attitudes about debt repayment.

Governments are being pressured to collect more in order to fund more. At the same time, traditional collection methods — landline calls and letters — are less effective as the constituent population shifts to mobile and social technologies.

Government agencies using best practices in their debt collection operations have clear advantages over those that do not. These advantages include increased revenues and efficiencies, higher morale among collector groups, decreased fraud, waste and abuse, and better constituent relationships.

WHITE PAPER

Government agencies using modern technology and best practices in their debt collection operations have not only been able to increase collection revenues, but have also significantly improved their constituent services, which becomes the basis to increased agency efficiency.

WHITE PAPERSuccessful Debt Collection for Government Agencies

It takes an end-to-end process that begins before delinquency has been established. It requires:

• A deep understanding of the risks and opportunities in an existing environment and current collection capabilities

• The ability to segment and process accounts and constituents using current, accurate data

• The use of smart automation

• The tools, analytics and operational support to reduce fraud, waste and abuse

The steps involved in this process take the government agency from an uneven and labored process to a streamlined, efficient and auditable collection and recovery operation. This white paper shows you how.

Understand Your Current Collection Process

Change is inevitable. So is the need to implement and manage it. Organizations and government agencies of all sizes have significant opportunities to take their collection and recovery operations to the next level, but often don’t have the knowledge of recent developments in methods, tools and technologies to take the leap.

The first step for government agencies that want to stay agile in the midst of new technologies, policy changes and constituent behavior is to analyze their current collection status.

A Current State Assessment is an evaluation process and methodology that identifies where collection and recovery capabilities can be enhanced when compared with industry standards and best practices. It gives government agencies an opportunity


• Review operational practices and procedures to help drive C&R performance

• Focus on management hot buttons, e.g., dialer strategy, operational reports, call flow and contact strategy

• Review results and reports for agent, strategy and portfolio performance

• Compare observations to industry best practices for recommendations

Information Gathering and Analysis

• Conduct stakeholder sessions to understand issues, performance and processes

• Compare decision management and analytic capabilities against those required to achieve goals

• Identify significant improvement opportunities, with areas of strength and weakness benchmarked against industry-recognized best practices

C&R Current State Assessment

• Provide presentation detailing key findings

• Identify and prioritize actions required to successfully implement recommendations

Personalized Roadmap

• Target specific areas of concern for further, deeper evaluation

• Develop a more detailed implementation plan for the roadmap recommendations

• Assist in implementation of recommendations

Roadmap Implementation

Fair Isaac® Advisors Collection & Recovery Current State Assessment process overview

What does it take for

a government agency

to transform their

collection and

recovery efficiencies?



to look at their collection and recovery activity through a new lens, evaluating the processes, technology, people, data, analytics, external factors, performance management and organizational structure.

This assessment should review critical practices and policies as part of an evaluation of the current work environment and collection operation to gain a deep understanding of specific needs. Interviews with key stakeholders and line management provide the basis for identifying the business issues facing the operation. A consultative approach combined with proven methodology and tools, existing workflows and processes should be analyzed, current conditions evaluated and risks/opportunities measured.

What You Can Expect from a Current State Assessment

Many recommendations generate “quick wins,” which are performance improvement opportunities that can be implemented in under 90 business days without significant capital expenditure or IT modification. The majority of agencies who have implemented “quick wins” see positive results in less than six months.

An effective current state assessment offers you:

• Observations and recommendations which convert into collection enhancements

• Estimated financial benefits associated with these recommendations

• Feedback on how to mitigate stress from the economy and unpredictable constituent behaviors

• Gap analysis of current operations versus leading practices

• Current state assessment of analytic effectiveness

• Roadmap of operational and systemic improvement opportunities

• Executive presentation of findings and recommendations to senior managers as appropriate.

A Current State Assessment can be conducted by Fair Isaac® Advisors, our team of experienced collection consultants. Learn more at www.fico.com/en/products/ fair-isaac-advisors-current-state-assessment.

CASE STUDY: Shelby County Trustee

Client: The Office of the Shelby County Trustee David Lenoir, responsible for property tax and other receivables collection and management for Shelby County, Tennessee.

Challenge: Improve current and delinquent property tax collection despite a limited budget; respond to the county’s falling real estate values and subsequent decline in property tax values by increasing collections without adding overhead.

Solution : FICO® Debt ManagerTM solution

Results : An increase in receivables collections by an overall 80 basis points, resulting in an additional $6 million in revenue within the first 120 days of delinquency; improved collector assignments and strategies based on data-based insight on taxpayers, and on collectors’ performance; developed a merit-based program to drive greater collector motivation and results.

Assessing your collection and recovery processes shows how you can:• Evolve from “seeming

productive” to measuring actual effectiveness and profitability

• Strike the right balance between the constituent experience and operational cost

• Identify siloed practices inhibiting collection and recovery efficiency and effectiveness

• Understand agency performance compared to industry best practices

• Align current technologies with processing to optimally perform and achieve better results

http://www.fico.com/en/products/fair-isaac-advisors-current-state-assessment

http://www.fico.com/en/products/fair-isaac-advisors-current-state-assessment



Evaluate Your Technology

If you haven’t updated your core platform or made significant changes in order to accommodate mobile and social media channels in the past five years, you’re at a technological disadvantage.

An explosion of communication channels and evolving consumer attitudes has unleashed new challenges and opportunities for government agencies. Higher debt levels mean only those agencies deploying strategies that engage smart automation, a variety of contact channels and analytics have a good chance to maximize success. It requires an analytically driven mix of tools to keep pace.

Smart Automation

The Sarbanes-Oxley Act of 2002, which calls for greater process integrity and accuracy in reporting, and the Consumer Financial Protection Bureau (CFPB) continue to influence accounts receivable management in great measure. As a result, technology adoption is being given greater attention and more serious consideration by organizations in every sector, including first-party credit issuers, third party collection agencies and government agencies responsible for debt collection.

Smart automation streamlines processes, accelerates production efficiencies and improves accuracy. It’s the foundation of collection and recovery success. It removes the need for spreadsheets and aging reports and provides the tools to focus on critical constituent and vendor-focused activities. It makes it easier to maintain consistent communication with constituents, send invoices, provide fast follow-up, calculate and analyze key performance indicators, and store vital information in one central place.

Government agencies that use smart automation are able to spend far less time on administrative duties, such as prioritizing daily activities or preparing for calls, and spend the majority of their time communicating with constituents, settling disputes, asking for payments and other value-added tasks that result in reducing bad debt.

Your core collection software platform should be built on an open architecture, which makes it easy to accommodate new technologies and easy upgrades. An open architecture facilitates system functionality, configurability, security and scalability. Integrations with new business files, dialers, third parties, accounting systems and more should be organized and easily managed no matter the complexities new files can present. If you’re unable to increase account volume with existing staff or collect a new debt type, it’s time to reconsider the status quo and consider a new platform.

Good, stable integrations are the basis to future growth, and the use of new technology makes integrating with any file significantly less cumbersome.



Optimize Resources for Maximum Results

Are you optimizing your processing? Optimization helps agencies strike a balance between loss reduction, resource challenges and operational constraints. Modeling, assessing and deploying strategies to meet business objectives drives gains across the entire debt collection engagement lifecycle. This can be accomplished with analytic capabilities and new technology.

Your collection processing should be available to you on-premises or via cloud deployment. Although many enterprise organizations and government agencies prefer on-premises, many others are moving to a cloud environment. The advantages — including reduced capital expenditures and the flexibility to scale — enable you to take advantage of complementary applications, tools, data, partners and most significantly, new technology.

Add Digital Communications to Your Toolbox

The consumer shift to digital communications means any organization collecting and recovering debt needs to shift, too. When this is a permissible practice, intelligent, automated, two-way communication solutions give government agencies the ability to reach out to consumers using voice, SMS, mobile applications, email and other channels.

FICO has worked with numerous organizations on communications strategy, tailoring call volume, timing and messaging based on individual circumstances, status and previous communications results. The solution should automate the process of determining which strategy to apply to each individual. It should also dynamically modify the strategy based on any change in constituent status. It ensures that agents are available to receive transferred calls, if necessary, for minimal hold times.

FICO offers a platform for intelligent, automated, two-way communications with your constituents. Learn more at www.fico.com/en/communications/collections.

Centralized collection environments, in which economies of scale are present, mean significant efficiencies are gained, allowing government to collect more of the liabilities that are owed.

http://www.fico.com/en/communications/collections


Speech Analytics: Not Just for Regulatory Compliance

Speech analytics is another technology that leads to an increase in the percentage of calls asking for a promise to pay, a focus on successful techniques and more targeted collector training and compliance. While it has been widely adopted by industry to ensure and demonstrate regulatory compliance, organizations are finding it is an invaluable tool for improving collection performance.

Agencies looking at speech analytics technology should look for solutions that integrate smoothly with existing telephony, messaging, database, IT systems and collection platforms.

Use Analytics to Identify the Right Treatments and Prioritize Accounts

Economic conditions and expanding delinquent debt mean it’s essential to find a systematic process to prioritize accounts for treatment, and focus collection efforts where they’re most likely to produce results. The competition for share-of-wallet is intense.

Leveraging analytics can significantly improve the ability to collect more of what’s due, leading to greater capability to fund government-sponsored programs. FICO has found that organizations using analytics typically see improvements that translate into millions of dollars in loss prevention.


Debt recovery leader

reduces violations,

improves performance

with speech analytics



The use of predictive scores for determining account treatment is widespread in the origination and account management areas of the credit lifecycle. In collection and recovery, predictive scores help determine how to best work accounts. These scores are designed to predict what will happen in a specific time frame using data elements proven to be effective for collections. Collection-specific scores help predict scenarios such as:

• The likelihood an account will progress into further delinquent stages

• Probability of an account self-curing during a specific time period

• The likelihood of a payment coming in the next month

• Amount of payment made

• Expected time to payment

Predicting the probability of a payment and the length of time it takes from collector contact to payment is critically important. But analytics don’t stop here. Since the objective is to collect as much as possible and minimize charge-off amounts, scores can help work out settlements and payment plans with specific accounts, and identify others that should be referred elsewhere.

Scores help collectors predict outcome and identify the most collectable debt. Other advantages include:

• Help to better understand your constituent segmentation

• Tell you which accounts to work first

• Replace “guesswork” with science

• Reduce costs with a clear reading of risk and uncertainty

• Add consistency to business decisions

• Improve the constituent experience

FICO® Collection Scores are an easy and affordable way to begin to bring analytics into your agency. To learn more go to www.fico.com/en/products/ fico-collection-scores.

Consider Centralized Debt Collection

Even though debt collection is a core competency of many government agencies, the fundamental mission of government agencies is to provide services. Revenue departments across the country act as the mechanism through which citizens fund their public services, from police and fire protection, emergency assistance and publicly operated hospitals to road construction, public schools, universities and more. Within these departments, delinquent monies must be collected in order to

http://www.fico.com/en/products/fico-collection-scores

http://www.fico.com/en/products/fico-collection-scores


fully fund these services. The filing of tax liens, issuing of tax warrants, levies and records, communicating with taxpayers and collecting payment are all part of the specific processing of delinquent tax debt.

But more than just taxes have to be collected by government agencies. Other debts collected on an ongoing basis include court fines, fees, judgments and citations, Department of Motor Vehicles charges, business licenses and fees, food stamp fraud, Health and Human Services fees, student loans, unemployment overpayments and others.

Specific offices have been created to collect specific debts. Tax departments collect taxes, motor vehicle agencies collect registration fees, courts collect fees and fines and labor departments collect unemployment overpayments. Health and Human Services collect social services fees.

Without a large volume of debts, it’s difficult to create a best practices environment that optimizes the collection process. Many jurisdictions simply don’t have the resources to upgrade their operation, plagued by day-to-day priorities that prevent them from giving the collection process the focus it requires.

Collected separately, agencies often lack a technology focus, resulting in vast differences in collection automation, capability, capacity and analytics in order to build a best practices environment.

Additionally, while aspects of each debt type are unique, many of the same rules and regulations that govern one debt type also govern others. Similarities exist in the use of outbound communication channels, correspondence, skip tracing, use of outside collection agencies, bankruptcy and the writing-off of debt.

Other areas, each according to the debt type collected, contribute significantly to the collection process. These areas include data availability, integration and maintenance, access to advanced collection tools, regulatory requirements and the capability to perform involuntary collection actions. Scoring for account segmentation, the use of omni-channel options and self-service channels for payments and other constituent communications can also be added to this list.

Consolidating the processes to collect a variety of debt types is a logical and increasingly common decision by government agencies in the United States. It leads to increases in debt recovery, decreases in collection cost and an enhanced constituent experience. Centralizing collection activities into a single, central agency has a variety of benefits, including:

• Streamlining and standardizing processes

• Leveraging the collection investment

• Increasing overall collection results

• Improving collection methods and technology across a larger debt pool

• Achieving economies of scale


FICO, Fair Isaac and Debt Manager are trademarks or registered trademarks of Fair Isaac Corporation in the United States and in other countries. Other product and company names herein may be trademarks of their respective owners. © 2015 Fair Isaac Corporation. All rights reserved. 4133WP_EN 06/15 PDF

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• Eliminating redundant activities among many areas

• Often increasing collection revenues significantly in year one

• Enhancing the efficiency and effectiveness of specific programs utilized across many areas

• Creating a more standardized, best practices environment

• Better serving the constituent population: one contact addresses all debt for a constituent or vendor

Getting started

Government agencies at every level have an unprecedented opportunity to contribute to the fiscal well-being of their constituents by optimizing the debt collection practices they follow. Agencies that understand their current capabilities and risks, can effectively segment and process accounts and use analytics to optimize processing dramatically to increase the likelihood of a superior consumer experience.

To learn how to do this within your own agency, visit www.FICO.com, the Collection and Recovery blog and read these briefs and white papers:

Fair Isaac® Advisors Collections and Recovery Current State Assessment www.fico.com/en/debt-management/fico-current-state-assessment

Debt recovery leader reduces violations, improves performance with speech analytics www.fico.com/en/node/8140?file=5578

Shelby County Boosts Tax Collection Productivity with FICO® Debt Manager™ Solution www.fico.com/en/node/8140?file=5572

Collection and Recovery Technology: Rethinking the Status Quo www.fico.com/en/node/8140?file=8364

http://www.fico.com/en/debt-management/fico-current-state-assessment

http://www.fico.com/en/debt-management/fico-current-state-assessment

http://www.fico.com/en/node/8140?file=5578



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