Ownership or Pool: Which Collections Approach is the Right One?

Before the implementation of automated outbound calling technology, most collections operations assigned accounts from cradle to grave. This has changed recently in favour of dynamically distributing accounts to a pool of resources, which provides for increased productivity.

The result is that there are two ways to structure collections accounts: an ownership approach or a pool approach. An ownership approach assigns one collector to an account throughout its life. A pool approach assigns different collectors to an account depending on its lifecycle stage.

Each approach has advantages and disadvantages depending on the collection scenario, whether or not you use debt collection software. Continue reading to discover when each is best. 

Ownership Approach: Advantages and Disadvantages 

The ownership approach has several advantages. As collectors become familiar with customers, they can increasingly apply firmer collection tactics in a logical order as the age of the accounts.

This close relationship between collectors and accounts also opens up more creative solutions, since collectors intimately understand a customer’s specific situation and are cross-trained in handling issues across all delinquency levels. As such, collectors have a wider range of tools available when devising ways to create positive collections outcomes.

However, the ownership approach also has disadvantages. Because accounts are often assigned by random criteria (like billing cycle or alphabetical order), the accounts assigned to an individual collector may vary widely. This makes it difficult to measure results and performance between collectors.

This account organization structure also creates a single point of failure: the collector. If the collector has planned or unplanned absences, then assigned accounts may not be worked adequately. Additionally, the collector may use less ideal methods to collect than another staff member, depending on his or her skill level. 

Because of these factors, ownership approaches are often used on corporate accounts or for hard collection and litigation management.

Pool Approach: Advantages and Disadvantages

The pool approach is made possible by modern technology. Using dialers, collections departments can assign accounts to a different collector at each stage of the debt lifecycle. The pool approach has significant advantages, especially in retail environments. When accounts are intelligently segmented and distributed, different approaches to collections can be leveraged since many collectors are involved. 

There were advantages in the ownership approach to collectors becoming cross-trained. But there can also be advantages in having collectors specialize in one area of collections using the pool approach. Specialization can help collectors do a better job of bringing accounts up-to-date when they’re assigned.

Finally, pool approaches make planned or unplanned absences easy to handle.

There is one big disadvantage to a pool approach: it doesn’t build individual relationships with debtors. That makes it more difficult to determine an individual debtor’s unique situation, which—in some cases—may reduce collections efficiency. Collectors will, in many cases, have to spend more time on each call verifying details.

When comparing the two approaches, understand that the ownership approach sacrifices efficiency in favour of building a long-term relationship. The pool approach does the opposite. Neither is always right; each is tailored for different debt-collection scenarios. Understanding how each works is the best way to decide which one is best for you.