Showing posts with label recovery management. Show all posts
Showing posts with label recovery management. Show all posts

Tuesday, June 19, 2012

Recovery Management Challanges

When banks believe that the recovery of profitability becomes negative, that is to say that the costs of recovery (internal or external) are higher than the estimated recoveries, and they use the "assignment of credit." Specialized institutions will buy all of these claims in order to industrialize their treatment and allow for better profitability.

Outsourcing requires optimization of internal information systems. To this end, banks must develop the means to proper management of records to be transferred to outside companies in order to facilitate exchanges of records and maintain traceability of each file. Whatever the mode of covering applied, the recovery are prioritized amicably limiting judicial proceedings can be lengthy and expensive and best preserving the business relationship.

With increasing current litigation, recovery activity will more than ever, be considered an extension of the customer relationship. It will therefore be treated with restraint to protect that relationship and ensure future business relations. This vision implies to take into account the possible end of the contract upon grant, and also connect to the best tools recovery tools on CRM and KYC. Beyond the regulatory capital gains in the medium term, the challenge of long-term activity is real. Only those who have established a global process, fluidized, possibly by using the assignment, will maintain the thread of dialogue with customers and so defend their local values.

Saturday, June 16, 2012

Recovery Management

Retail banks have more difficulties to act upstream because they do not always have the same tools for monitoring risks. Also the volume of customers does not allow individual monitoring as efficient and systematic. Finally, the financial stakes of unit operations are often more important at the BFI, tools KYC (Know Your Customer) are often much better.An effort to strengthen the prevention of counter-party risk should be primarily focused at the retail bank. To be most effective in monitoring customer, banks must improve their KYC tools and adapt information systems to ensure better traceability and customer knowledge.

As part of the difficulty in tracking customers, banks must also be able to manage more aggressively selecting records management solutions pre-fault available to them: credit retrieval, assignment of claims ...

And if despite this, the transition to recovery is inevitable, it must be managed at best to recover the money owed.

Banks now use three different modes of recovery: the recovery in house, outsourcing and the assignment of receivables. According to the amounts to be recovered, the volume of files to process and cost recovery charges / recoveries banks prioritize one mode over another.

Internalization of recovery is used when the amount of recovery is important. This method has the advantage of allowing banks to keep a close link with its customers (customer loyalty) and propose appropriate solutions according to their situations. They must be able to identify different types of debtors, and thus to distinguish the deadbeat clients temporarily in difficulty. In this case also, good customer knowledge is required in order to propose a debt restructuring to the right customers. Outsourcing is prioritized by banks to process a large volume of records of outstanding amounts and less homogeneous. External companies are mandated by the banks to to recover on their behalf for a fee depending on the amount recovered.

Friday, June 8, 2012

The challenges of recovery management

In the context of economic crisis, late payments of companies have never been more important in Europe for four years in the UK for 10 years and Italy for 13 years. In Europe, these late payments weigh 90 billion Euros per year and account for 10.8 billion Euros of lost interest. Also records a steady increase in litigation causes the loss of nearly 24 billion Euros
this resurgence of unpaid is accompanied by increased provisions penalizing the financial results. For major European banks, have seen a sharp increase in 2009 the cost of risk compared to 2008.

To limit the increase in the cost of risk, banks must increase their efforts on managing risk cases and those in default. To do this, banks must act on the entire loan process: