SMS for Debt Collection
Of the many tried and true methods to recover debt and improve debt collection one simple method to shorten the collection cycle is a low cost payment reminder via SMS.
More cash, lower costs
SMS can aid debt collection on delinquent and other accounts such as credit card payments, house and other loans. Businesses can also improve the likelihood of loan payments being made on time through a message reminder system. With MessageMedia, there is also the option to generate delivery receipt notifications for proof of delivery of message to provide absolute assurance that the message is getting through.
“We’ve a customer that operates in one of the highest payment default industries in Australia. They use MessageMedia to keep aged receivables under control. Another customer piloted SMS in its collections and fraud division, and early indications of the effectiveness of SMS for debt collection were excellent achieving a monthly ROI of 640%.”
Use SMS messaging to:
- Improve the collections rate
- Lower collection costs, including mailing and outbound phone calls
- Drive cash flow back through the businesses
- Notify clients invoices are overdue
- Send a Tiny URL with a link back to a website payment gateway
- Send messages designed to get delinquent creditors to call in.
Simple text messages can enhance customer relationships as they are perceived to be less threatening. SMS text messages were particularly effective for younger customers.  Many creditors refuse to answer calls from blocked numbers and they ignore mail but response rates to SMS are higher.
Lift response rates
Through MessageMedia’s experience working with both debt collection agencies and many companies undertaking debt collection, getting a response from customers is key. Many creditors refuse to answer calls from blocked numbers and they ignore mail but response rates to SMS are higher.
- Use dedicated numbers or alpha tags to reduce the customer perception that message is illegitimate or a scam.
- Send or schedule messages to be sent at an optimal time based on your customer demographic profile. Response rates will differ depending on gender, geographic location (metro v regional) or age, for example SMS text messages are particularly effective for younger customers.
- Enable delivery receipts to capture failed deliveries and identify deregistered mobile numbers. Delivery receipts can also help you build up market intelligence over time to identify the best time to contact users – this can also be done in conjunction with demographic profiles.
‘Remembering to Pay’ Ximena Cadena, ideas42 and Antoinette Schoar, MIT, ideas42 and NBER