It is advantageous for your organization to keep third-party collections and first-party collections activities separate. While first-party collections take on the identity of the client and involve a more direct customer-service-first approach, third-party agencies more directly relate to maintaining your own identity while collecting on defaulted debts. Keeping these two types of collection efforts separate is beneficial for several reasons.
Maintaining Strict Boundaries
It helps to maintain a clear distinction between the creditor and the service provider. When a consumer receives a call or letter from a collection agency, they should know immediately that it is a third-party attempting to collect on behalf of the creditor.
This strict need for boundaries between first and third-party collection activities is the primary reason for separating these two disciplines. By maintaining separate teams, and even going as far as separating the teams into two different buildings, your organization will remain compliant and avoid cross-pollination on either side. By keeping first-party collections separate, creditor clients can avoid any confusion or ambiguity about their own obligations and responsibilities when attempting to collect unpaid debts via your organization.
Better Customer Experience
Another reason to separate first-party collections from third-party collections activities is to provide a better customer experience for consumers. Consumers often feel intimidated and stressed when dealing with debt collectors, which can lead to them avoiding contact or being uncooperative. This can make it difficult for the first- or third-party collector to resolve the debt in a timely manner.
By separating first-party collections from third-party collections, your first-party agency can provide consumers with a more focused experience. When a consumer receives a call or letter from a third-party collector, they know that they are dealing with a separate entity from the original creditor. This can help to reduce the stress and anxiety associated with the debt collection process, which can lead to more cooperative behavior.
Increased Effectiveness Through Specialization
Finally, separating first-party collections from third-party collections activities can increase the effectiveness of the debt collection process. This is because third-party collectors are often more focused and experienced in the art of collections than your organization’s first-party attempts. They may have access to additional tools and resources that the first-party organization does not need, such as skip-tracing software or legal teams.
By moving the debt collection process to a third-party collector, both the first-party team and third-party team can increase their chances of recovering the debt. The third-party collector may be able to negotiate a payment plan or settlement agreement that the first-party team does not have the authority to make. They may also be able to locate consumers who have moved or changed their contact information, which can be difficult for the creditor to do on their own.
Keeping first-party and third-party collections separate is crucial for maintaining clear communication with consumers, treating them fairly and respectfully, and protecting creditors from legal liabilities. By following established best practices and regulations, creditors can ensure that their collections efforts are both effective and ethical, and that they maintain a positive reputation in the eyes of their customers and the wider community.
Learn More Online
To learn more about how organizations like Capital Management Services create clear boundaries, maintain strict compliance standards, and successfully run both a first and third party collections agency, visit the CMS website.
About Capital Management Services, LP
“Capital Management Services LP is a nationally licensed collection agency headquartered in Buffalo, NY that provides the highest quality of proven recovery and project solutions across the financial industry. We maintain our reputation as a proven leader and performer through our attention to detail and tailoring our strategies to meet the unique needs of each portfolio or project. We are proud of our ability to consistently surpass all industry standards for quality and provide outstanding services that add strategic value to every client partnership.”