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Still Struggling with Debt Recovery?

Collection Assessment
Sonali Shahu
April 30, 2021

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Recovering Money has always been the most sensitive subject in the Financial Sector. These days we observe a lot of strain in banking and financial services. Most of the BFSI and NBFCs are struggling to balance their money flow to keep themselves in the good list of RBIs. Last financial year – 2018, India experienced about 11.2% jump in gross NPA (Non-Performing Asset) which makes about Rs 10.39 trillion as per the RBI's stats. Non-Performing Asset refers to the loans given to the lenders that fail to repay or default affecting the cash flow in the economy. The uptrend in NPA has been mainly due to two factors – ineffective recovery tribunal and rise in willful defaulters.

The two terms – Non-Performing Asset and Receivables Turnover Ratio always showcase the inverse relationship in the economy. The rise in NPA and decrease in Receivables Turnover Ratio becomes an alarming state for any company when it comes to survival in such a competitive financial market. To talk about Receivables Turnover Ratio, it is an accounting measure used to quantify a firm's effectiveness in collecting its receivables or money owed by the customers. So, who manages this ratio? It completely relies on the effectiveness of the ‘Debt Collectors' that company hire. The hiring may happen through a one to one interview or with the help of a recruiter. But then what all parameters do we consider while hiring a ‘Debt Collector'?

Many a time we presume a Debt collector should be someone who can be aggressive to scare people for their debts and even pressurize them to pay their dues on time. But, does such kind of hired help these BFSI & NBFC companies to meet their recovery goals? Not always what I feel. Looking into the past, the reason for defaulters globally have changed from ‘lack of money' to ‘attitude to payback'. So, will only a forceful attitude towards defaulters help debt collectors achieve their goals of recovers?

The second type of defaulters, that is, people with an attitude issue to pay back their dues smartly affect the reputation of the company by claiming false complaints of harassment. This makes the recovery process more complicated and even mislay of customers due to traitorous publicity. Retaining customers has become more crucial nowadays even if they are one of the defaulters. But then is it really serving the purpose of hiring a debt collector for the recovery process?

In this world of fraudulence, it has become a challenge for companies to balance their Receivables Turnover and Customer Retention Ratio. You may lose a customer if the debt collectors behave aggressively with them or lose your money for being submissive to retain them thereby maintaining the reputation of your company. Being on either side, it is going to be your loss!

So, what kind of candidate would be appropriate for this role that would not only recover the dues unpaid but will also maintain a good rapport with the customer hence retaining them from diversifying to your competitors. Nor aggressive nor passive – the best fit for the role of debt collection is a person who ascertains what they want and states the same in an assertive manner.

An ‘Assertive' person is one who communicates her/his expectations in hand to others in a non-aggressive way. An assertive debt collector can speak up and raise voice in demanding situations such as defaulting customers, delayed payments, or aggressive customers, without hesitation or their reluctance. Let's understand this through an example. Say we have two people who opted for a loan from an NBFC firm. As per records, both fall in defaulters and have been assigned to a debt collector. After studying the case, s/he realizes that one person purposely defaulted whereas others were unable to make timely payments due to some medical emergency in her/his family. In such a situation, an aggressive person would opt for a common forceful approach for both the individuals. But an assertive person shall take the circumstances into consideration and modulate tone to convey the required message. S/He may also showcase required consideration to people who genuinely could not pay and may help in the process, creating a good rapport with the customer.

Now, the last question that must be popping up in your head could be – How can one identify whether the candidate that walks in for job opportunity is ‘Assertive' enough to meet the company's goals?

PMaps is an analytic-driven psychometric assessment firm where we psychologist along with data-science people develops all-embracing algorithms for different job roles. Our tools help organizations to assess their candidates and understand their fitment for a specific job role. Our scientifically validated PMaps Collection Assessmentassess candidates on different parameters like behaviour, ability, and skill. The behavioural section along with other required behavioural parameters assess individuals on ‘Assertiveness' scale. The real-time-based reports in a second after completion of assessment provides you a comprehensive report about the individual making your decision – Scientific, Measurable and Reliable for the company. We at PMaps assist organizations to take quick reliable decisions and save their hiring time and cost.

To know more about our offerings, you may reach us at –

– Sonali Shahu (Psychologist)

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PMaps Frequently Asked Questions

Learn more about PMaps through commonly asked questions:

Current money recovery challenges for BFSI and NBFCs?

BFSI and NBFCs face challenges in recovering money due to increasing non-performing assets (NPAs) and strained cash flows.

Definition and causes of NPAs in India?

NPAs are loans that borrowers fail to repay, affecting cash flow. Causes include ineffective recovery tribunals and a rise in willful defaulters.

Importance of Receivables Turnover Ratio and Debt Collector Effectiveness?

The Receivables Turnover Ratio measures a firm's ability to collect receivables. Debt collector effectiveness impacts this ratio and influences financial stability.

Factors in hiring debt collectors and the effectiveness of aggression in recovery?

When hiring debt collectors, factors like communication skills and empathy are crucial. While aggression may work in some cases, understanding the debtor's situation is often more effective in recovery.

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