Last week we talked about skip trace waterfall procedure– how debt collectors find out where debtors live and the best way to contact them.
To recap, waterfall procedures are modeled after a software development concept and are organized by tiers of vendors that provide specific services. This week we continue our waterfall theme by discussing employment and banking waterfalls.
Employment and banking waterfall procedures utilize the same type of vendors as skip tracing but exist to search for a debtor’s place of employment and banking information. This information (often called “hits”) is necessary to move forward on accounts and execute the judgment that has been handed down by the courts, either by garnishing a debtor’s wages or performing a bank freeze.
When building a waterfall, it is important to establish contracts with multiple vendors. The vendor at the top tier of your waterfall will be the net that catches the most, for the lowest price. In other words, negotiating price with your best, most accurate vendor is the best strategy for improving your waterfall’s efficacy. Waterfall specialists must constantly be analyzing the results and effectiveness of the waterfall while continually providing feedback to vendors as to the quality of their work.
Vendors will normally charge a low rate for non-verified hits and a premium rate for verified information. Vendors understand they are competing for your business. Their goal is to be the first to receive each account, thus improving their change for success at giving you the best return on your investment. Once the first transaction (search) is complete, the accounts without any hits begin their way through the trickle-down effect that is the waterfall.
Lastly, because search information comes from data garnered by applications for jobs, credit cards, cell phones, etc., new information could present itself at any time. For this reason, it’s a good practice to resubmit accounts back through the process approximately every six months to ensure information is captured as debtor’s circumstances change.
And then, just as the back of the shampoo bottle instructs, rinse and repeat as necessary!
Drop by next week for Better Business Practices, Part VI on internal auditing procedure.