jarman nickSkip tracing is a critical component necessary to develop and implement an effective, efficient, and productive account workflow strategy. Skip accounts, generally defined as accounts without any accurate location information are sometimes overlooked in the overall collection process. Because there isn’t any good contact information with the accounts, skip accounts are very valuable when you integrate a solid skip tracing strategy. A solid skip tracing strategy consists of answering three important questions; which accounts should you skip trace, should you manually or automatically skip trace, and who should be responsible for skip tracing.

Which Accounts to Skip Trace

This decision should be portfolio specific because each portfolio is unique, especially as it relates to key factors such as days delinquent, type of debt and average balance. Every account placed is an opportunity so it is important to determine the level of intensity, if any, each skip account will receive. There are a couple approaches to determine which accounts to skip trace. One broad approach would be to skip trace every skip account with the same intensity. A narrower approach would be to tier the accounts based on a metric and level the intensity and effort of the skip tracing program based on the metric. One tier may get several different types of searches, whereas another tier may only get one pass through a single vendor while another tier may not get any skip tracing at all.

Another factor to consider when determining which accounts to skip trace is cost. Unless you operate with an open checkbook and aren’t concerned about costs, preparing a skip tracing budget is highly recommended. This will allow you to pre-determine how much money you will spend in a current month on skip tracing and project expected hit rates in comparison to hit costs. This will ensure you are focusing in on those accounts you feel have the highest probability of payment if new location information is identified. Having a good knowledge of your portfolio coupled with an understanding of your skip tracing budget will assist you in preparing which accounts to skip trace.

Manual or Automated Skip Tracing

Once you have determined which accounts to skip trace, manually skip tracing accounts with a higher propensity to pay has traditionally been a good model to implement. With general liquidation and yields lower than what the industry has been accustomed to, trying to manually skip trace every single account tends to become very timely and cost prohibitive. Therefore, limiting manual skip tracing to accounts with the highest probability of repayment tends to be the most efficient and effective strategy. The other important aspect of manual skip tracing is to ensure the chosen databases skip tracers have access to will provide the most accurate results.

Automated skip tracing has become increasingly popular and continues to be refined as an effective alternative to manual skip tracing. Automated skip tracing also allows the benefit of skip tracing a large amount of accounts in a short period of time, sometimes hours if not minutes. Automated skip tracing success is also pre-determined when the development of the skip tracing strategy is implemented. Before commencing a round of automated skip tracing, a choice has to be made. Do you want to receive less location information with a higher degree of accuracy or do you want to receive more location information with a lesser degree of accuracy? With compliance concerns at an all-time high, many agencies are choosing less location information with a higher degree of accuracy to help assure they are calling the right phone numbers.

Who is Responsible for Skip Tracing

There are those who are gifted at skip tracing and then there are others who simply are not. Skip tracing can be a learned skill with time and training, but ultimately successful skip tracing is an intuitive skill. While every manager or collector has the ability to skip trace, it doesn’t mean they all will be effective at it. An ineffective skip tracer can be very costly from both a production and compliance standpoint. Before opening up the skip tracing flood gates of information to just anyone, look to identify those managers or collectors who have shown the ability to utilize their experience and intuitiveness in order to get the most production and efficiency from their skip tracing efforts.

Once you have determined which accounts to skip trace, how to skip trace them, and who should skip trace them, you will be on your way to developing a successful skip tracing program. Look at skip tracing as an art; some artwork is great while some is awful. Developing a successful skip tracing program can assist you in locating consumers who have been off the grid for a while and ultimately create an advantage for you against your competition.

Nick Jarman is COO at Delta Outsource Group, Inc. He also serves on the Board of Directors for ACA International.