Even in good times, asset-based lenders and lease finance companies often make costly mistakes that bleed profits, damage customer relationships, and tarnish brand reputations. When originations are up, watching deficiency balances skyrocket too is maddening.
After over 25 years helping banks, captives and independents, we’ve identified 5 critical mistakes to avoid:
- Delaying Engagement with Late Payers
- Disempowering Collections Teams
- Inadequate (even sloppy) Compliance Management
- Poor Documentation Practices
- Going it Alone
Fortunately, there are steps lenders can take to minimize these financial, operational, and reputational risks.
Engage with At-Risk Borrowers Early
Engaging with potential deficiencies early is crucial. A study by PwC found delinquent accounts over 180 days past due have just a 20% recovery rate compared to 90% for accounts less than 30 days past due. The sooner you engage, the higher your chances of recovering the asset or resolving the debt amicably.
Empower Your Collections Teams
Customer-centric, emotionally intelligent collections from people who are empowered to think on their feet are also vital. Research by Ernst & Young showed these approaches result in 19% more cured delinquencies and 17% more placements on payment plans compared to aggressive tactics. At ACS, empathy and a solution-first approach underpins all our customer interactions.
Keep Your Eye on the Details
Compliance lapses can prove catastrophically expensive. The University of Illinois found wrongful repossession lawsuits cost lenders $300,000 on average in legal fees and reputational harm. Rigorous policies, training and audit procedures are essential to avoid this.
Dot the I’s and Cross the T’s
Robust documentation provides a paper trail to protect lenders’ interests. It ensures proper procedures were followed and can defensibly justify actions if disputes arise over delinquencies, collections or repossessions.
Partner When the Time is Right
Whether your business is strong or you wish it was stronger, don’t let preventable missteps dampen your results or derail your success. If you’re not completely confident about your ability to execute the action items laid out above, or if the results you’re getting aren’t measuring up to expectations, the right partner can help you overcome the obstacles to top performance.
Lenders large and small across the country choose Asset Compliant Solutions to be their strategic partners. ACS’s great people, service-first culture and our reputation for product and process knowledge, regulatory mastery and domain expertise make ACS the go-to resource to inform, educate and advocate through every stage of the asset lifecycle.