By Emily Faracca – On
The Collbox team shares their insight into how debt collection can leverage technology.
Co-founder of Collbox Cameron Desautels had a friend who wanted to use a collection agency to collect his company's unpaid accounts. He found the process of working with the agency to be much more difficult than he thought it would be.
Cameron wondered - how many companies write off bad debt because the prospect of working with collection agencies seems like more trouble than it's worth? And that's how Collbox was born.
"If you want to employ a collection agency," reads their website, "it’s tough to find one that understands your business, charges a reasonable rate, and operates to a high professional standard."
Collbox acts as an intermediary between businesses with unpaid accounts and collection agencies. Their free service strives to connect certain kinds of debt with agencies who specialize in collecting that kind of debt.
We talked technology trends, what the team at Collbox looks for to determine whether a collection agency is reputable, how they expect the technology landscape and the collection landscape will overlap, and much more. Check out the video or read the interview below!
So tell us about yourself.
Cam: So to give you a brief overview of what it is that we do here at Collbox, we're kind of an intelligent platform to help businesses with their collections needs. So we plug into various systems that small businesses use to store their invoicing data and then we intelligently match their overdue accounts with collection agencies who can best service them. So on the back end of our product we have a network of collection agencies and we try to intelligently match businesses with agencies to maximize the results.
So anyone can join up, right? Any agency can reach out to you guys, and you'll vet them?
Cam: Yeah exactly so our partners are collection agencies, so what we're really interested in is working with the best and most focused agencies out there.
Matt: Yeah anyone's welcome to reach out to us and we're happy to share some contact info as well, and yeah we definitely kind of interview, vet and check every agency that wants to be a part of the network. We're really interested in like, what do you specialize in? What types of collections are you best at? And really kind of what what kind of business do you want to receive, right? So we really kind of work with specialists in different areas. So we're always interested in meeting new agencies, absolutely.
What do you look at to make sure that you're signing up the right agency?
Cam: So we kind of have an internal process where we do vet all agencies and then on an ongoing basis, of course we track kind of feedback from our clients, our users, make sure that they had a great experience working with the agency, log any incidents, things like that. I mean the nice thing is we really haven't had any issues in our network. I think our vetting process is pretty thorough, other kind of people that are part of the company have a lot of industry experience, so we kind of have a nice way of vetting people beforehand.
And really you just get a good feel for people as you meet with them a little bit, so it's not something that we onboard agencies instantly. We definitely kind of work with people that we build a relationship over time but then I think that really helps lend itself to you know putting them in the right position and then they get business they want, and we all have like a great experience as a result of it.
So how did you guys get into this?
Cam: That's a great question. So one of our team members was running an IT consultancy and he had some customers who weren't paying him. It's probably worth saying we're technologists by trade, we're not collectors. We kind of came to this, you know, by really experiencing the pain ourselves. So he had these customers who weren't paying and he was fortunate enough to know a collection agency and he went to that meeting. said "Hey, what does it look like to send these accounts to collections?"
The process he was met with, he thought, was really more complicated than it needed to be. They wanted him to fax documents over, the rates were not upfront and transparent, you know, he really thought there had to be a better way to do this. And you know, he was thinking as a small business owner like why can't they kind of meet me where I am right? I already invoice out of these tools, I already use these accounting tools, they have all the data that the collectors need, but there's really just not an easy way to like get that data to the collectors. And you know we looked at the problem and we realized that if we kind of played that role at the tech intermediary, not only could we facilitate that transfer and make that process a lot easier but also by sitting in the middle there we could find the right agency for the job, we could find the best rates, you know we can really optimize the situation so we could help small businesses to find better collection agencies to work with. And we can help collection agencies to kind of specialize and focus on the work that they really wanted to focus on.
Matt: Right and like you mentioned I mean you can preface that with like collections kind of rough right? Like we all know the reputation and it's difficult. And there are great agencies that are just battling against that. They're trying to do good work, they're all on board we know that the business owners don't always know that right? So another kind of element there we think of like us setting in the middle and focusing very much on transparency, very convenient, very upfront, offers rates, terms, everything end to end. We kind of abstract that a little bit we kind of just separate it, and we say here's a nice clean way to submit your accounts to collections, it's okay that you're doing that, like you're a business owner you deserve it. It's the same thing that agencies have been saying forever but we just kind of take that and we put we kind of put a spin on it that we think really helps kind of separate it from that reputation and then we're very tech enabled so people are always looking for convenience of course but then at the end of the day because we partner with agencies that are good they get the benefit as well right so we kind of kind of fill that void I think a little bit is the way . And I think that's great, cause I think there is a void right? Like I think there's a lot of like small businesses that have no idea like just kind of like write it off and call it a day, and they have no idea how to connect with a debt collection agency so it's like yeah it's probably 75% of our users have never used collections before. They don't really understand how to use it, what they can send to collections, when they should be sending it - we try to tackle all of those problems. Basically if you could click on something in our platform you can send it to collections. So we'll kind of take care of helping you to understand what you can send and increasingly we want to add kind of behavioral nudges to encourage our users to send things at the right time because we all know time is the enemy when it comes to collections right? We see people you know who don't have any knowledge of the industry, they'll sit on something for four years and say well I guess I'm ready to send it to collections. Like there's a thing, it's called statutes of limitations. And even if it's within statue you don't know if you get anything.
And your system relies heavily on machine learning right?
Cam: Yeah, increasingly so. I mean so we think that one of the things that's really cool about where we sit as an intermediary between the business and the collection agencies is being able to kind of accumulate this apples-to-apples data set of who succeeds at collecting what right? So our job as an intermediary is really to make sense of that data, and to say okay this agency is really good at collecting construction accounts in the Midwest right? Or for businesses of this size, you know that are in this or that field to do consumer work. I mean you know over time, we'll get better at that and obviously we'll leverage every angle we can to kind of be a better matchmaker let's say.
So now that you guys are in the space, how do you think the debt collection industry leverages technology now, and where do you see it going aside from your own innovation?
Matt: I mean I think there's a few angles on it. I mean there's great companies out there like Arbeit, and that's important right? I think we see a lot of agencies focusing on like processes like, how do we get connected faster, how are we documenting more effectively, reducing kind of administrative burden right at the end of the ton of money lost, not just in like getting a business itself but how are we servicing again, how quickly. So we definitely see a lot of that. Obviously there are great CRMs out there and there's just so many to choose from so there's a lot of good innovation happening right there, internal tech.
Cam: We think what we're a part of is maybe a next wave of tech that is a little bit more outside the building that kind of connects with the agency externally and allows the agencies to focus on really what they do best like we were talking earlier, about small businesses not knowing how to use collections. We think that what we do in some ways accesses a market that hasn't used collections in the past, and we can keep doing that we're not an agency you know? We want to partner with agencies so we think that there's an opportunity kind of for for agencies to partner with people like us you know and to kind of get access to new markets especially as an industry become even more competitive.
Just out of curiosity, on the other side, is it mostly small businesses you're working with? Like what kind of debt is out there?
Matt: Yeah I think what's really we kind of touched on this a little bit before we got started but yeah, most of our users you know when they come to us have never used collections in any capacity. You get those that have. And this is right on the edge, it's like they've done some small claims stuff and a couple have tried agencies before, but are always interested in kind of shopping around to see what's out there right? And then convenience comes into play right? But yeah I'd say most of the time it's like small to medium sized businesses that are you know these are people working hard, wearing a bunch of hats at their company, and at the end of the day like we I think we touched on before, you know, they don't feel like they have time to get educated on when do I send it when is exactly the right time and is it day 90, is it day 120, I mean we joked about four years, but it happens just a process right? Because they're just too busy so for us. It's, you know, it's I'd say it's mostly kind of on the B2B side, these are you know mostly commercial. But there's actually significant track of consumer B2C companies that come through our platform, tend to be a little bit smaller but of course we work with kind of mid and larger companies here and there too so we're pretty open. The nice thing is the way we partner with those companies is by integrating with systems they already used, and the ones we integrate with tend to run the gamut of all sizes of business.
Data protection is a big thing now. What are you guys doing on your end with all the sensitive information you handle?
Cam: So it's definitely something we're sensitive about. We are really a cloud first business so we definitely took care to kind of choose our cloud technologies to be like secure from the ground up right? I mean high level obviously we make sure that all of our data is secure at rest, it's secure in transit, and we also do kind of regular external security audits so gonna bring somebody in to come to penetration testing and you know report any issues that they run across with us.
Matt: That's also a part of our relationship with one of our applications that's a partner of ours that we integrate with is that they require us to do that and that's fantastic, we're happy to do that and to come you know even more transparent there right? So you know it's obviously concerned I think I certainly understand it's a concern for agencies and it's going to become more of a concern over time as there's more regulation right so you know we are, I would say one thing that we do is we work very closely with accountants actually there are big channel partners with us and they often bring their customers to us and they say you know you need to solve this AR problem here's the tool that can do it right increasingly those accountants are also becoming kind of domain experts right there they're kind of transitioning from being bean-counters to trusted advisors in their own industry and sometimes you'll see you know accountants also who are becoming kind of experts in what tools you can use to keep your data secure and that sort of thing.
All of that is to say I think as as legislation moves forward, as regulation moves forward one of the best things that agencies can do start to is engage with outsiders who have that knowledge, you know I think they're gonna make more and more people who have that knowledge that you can tap. Right I think it's you know whether it's your partnerships that you have certainly we kind of think about it that way and in our world right you know my agencies partnering with us they should be able to trust that we're taking care of business on our side, but even internally right I think as you look at hiring, not necessarily those on the sales or collections floors but you know what about the other members in your company right and as you get into hiring I think it's worth like at least maybe looking at that as like a kind of a piece right you know, what is their tech background? How comfortable are they with you know rapidly evolving technologies and things like that? I think that can really serve an agency well is just bring some of that in-house, you can't bring everything so you're gonna have to look outside but you know and as workforce gets younger that tends to happen. But I think being selective about it is pretty important too.
What advice would you give to collection agencies to prepare themselves for the ever-evolving tech landscape?
Matt: Try to keep your fingers on the pulse of what's happening. You can't possibly keep up with everything, nobody can, and we're like a tech company right? It's always evolving. But yeah, I think it's it's bringing in talent, keeping your eyes open, looking outward for resources a lot like this one, just get updated right? Like let others do the research for you.
Cam: I think one of the perks that kind of the gig economy shift right is that it lets us all kind of focus a little bit more specialized a little bit more you know and I think what we do fits into that cultural shift in terms of our relationship with agencies right, our hope over time is really to allow agencies to do what they do best more. So if your agency is particularly good at understanding let's say the construction industry, you know if every customer who came through your front door could be a construction client that would be awesome right? I mean when you know when uber came around like cab drivers didn't have to learn how to write apps you know they just benefited from this intermediary that existed. I think that that's, you know, that's what we're trying to do here. And kind of what we see the role of collectors being in the future is really just doing what they do more and specializing on what they're best at and we'd love to you know partner with more agencies to bring them the kind of work that they're looking for.
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