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Best practices for bad loans

(Premium Members - Free Guest Access) Collections departments should use advanced approaches for each segment of debtors.

01/11/2007
Tobias Baer, Rami K. Karjian, Piotr Romanowski
McKinsey Quarterly
Best practices for bad loans

Companies that offer credit—banks, retail groups, utilities, and many others—can reduce their write-offs significantly by applying the same marketing expertise they use in selling credit in order to collect from debtors. A first step is for corporate leaders to insist that the collections department must meet the same performance standards they demand throughout the organization.
Particularly in emerging markets, these banks and other credit-providing companies can engineer vast improvements in their collections by segmenting delinquent borrowers and tailoring their approach to specific segments. A centralized collections department is a prerequisite for implementing effective and efficient collections operations.

 

Best practices for bad loans

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