Unsecured Loans-Debt Review Exit Matters
Overview
Since 2008 Sigma Connected has been providing debt collections services to one of the biggest unsecured debt lenders in the country across a number of brands.
We first worked with this client on their Potential Debt Sale placements before they were sold. This was proof to the client of our ability to collect on very tough debt. At Sigma, we believe that debt can only be collected once which makes it essential to have a good collection rate in the first round to reap all the collection benefits.
Today, we continue to manage a huge portion of their outsourced collections across early and late-stage portfolios such as Debt Review Exit Matters where we manage 76.37% of their base while also managing 15 % of their base for early arrears’ portfolio, alongside six other external debt collectors and their internal collections team.
The challenge
This client had thousands of cases which were previously under debt review, and they had also not received any payments from the Debt Counsellor for periods of up to six months.
These challenges resulted in the client not generating any payments. Additionally, the third parties who dealt with them were not able to salvage the outstanding payments either.
The Client was keen to benchmark internal and external performance across a range of areas such as collections performance (yield rate), return on investment and, most importantly, quality.
The solution
During a three-month trial, Sigma set up team of two full time employees (FTEs) to work on the debt review exit cases. This was launched within 2 weeks.
The Sigma team became the Champion Challenger to internal teams as they were collecting twice the amount of early debt.
Through the use of Sigma’s collections system, diallers and tracing tools we were able to offer attractive settlement mandates.
We managed to deliver with Sigma South Africa’s debt collector’s brand by using contingent commission rates with our employees. No collections meant no commissions which incentivised the team to increase collection rates.
The result
Sigma successfully started improving the early debt collections month on month from 0.18% increase to 0.88% until it achieved a 1.2% yield increase. This equated to 29% of payments activated and paid with a 73.80% kept rate.
The month on month lift in gross collections was possible due to the expertise and efforts applied by Sigma, totalling 6369 calls, 1661 SMSs and 415 Emails.
We rapidly expanded the number of employees in a short period of time and the panel was decreased to 2 external debt collectors of which Sigma now manages 76.37%.
