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Transforming Government Collections into Customer Service

  • Written by Joshua Fluegel

crsThe struggle to juggle both consumer and client relations is a very real one in government collections. The scrutinizing eye of the government in government collections is validated by the fact that a third-party agency is an extension of government authority. But how can a collection professional obtain payment when so many actions could be labeled as a misstep? However difficult, agencies have found a way. Such an agency is Capital Recovery Systems and its president, Craig W. Klein. This issue’s Agency Spotlight asks Klein how they got into government collections, discovered the means to operate successfully and still be labeled “the nice people” by clients.

How did you become involved with Capital Recovery Systems and collections?

I founded Capital Recovery Systems (CRS) in October of 1996. My wife Cindy and I actually were the two CRS people who went through the installation of our collection management system in the first week of February 1997. Andre from CR Software spent three days with us installing and training us. At that time we were operating with four dummy Wyse terminals and one shared PC for Internet use. I initially got involved in collections in 1991 with GC Services with their educational recovery services arm. At 34 years old I had gone back to school to finish my degree at Ohio State University. When time and money ran out on me I reached out to my long-time friend Dennis Johnson who was managing the ERS division at the time and he gave me a job as an entry-level collector. I spent five years or so learning as much as I could from Dennis and went through what I think is one of the best management training programs. I was intrigued by the industry and I thought there were some things I could do differently that went against the stereotypical view of the industry. My agency was going to be the one “with nice people” and operate in a complaint-free environment. You have to think you can change the world (whether or not it’s realistic) when you take on starting a new business. We didn’t change the world, but I am unbelievably proud of our compliance record and zero FDCPA litigation against us in over 19 years in business.

As a collector of government accounts, is Capital Recovery Systems audited?

If so, what do you do to make sure the audits go smoothly and do not hinder the collection process? We are audited. When they audit us on-site it has never been a problem whatsoever. Our bookkeeping and reporting processes and our daily remitting of money collected make it easy for our clients to perform those audits. Up-to-date technology gives us an opportunity to make our clients very happy by providing the opportunity to perform audits, report payments, run reports, place accounts and close accounts remotely. We provide them what is called our NAVIGATE System, via our FICO software, which gives them complete access to their accounts and any and all data they need to perform all of those functions. NAVIGATE helps keep our folks focused and a feeling of being held accountable. When your clients have the ability to see anything and everything you’ve done with their accounts, you better being doing things right, doing what you sold them and meeting any due diligence they may require. The same goes with our call recordings. Our clients have access to every call, inbound or outbound. In that situation, you better know that your staff is treating your client’s constituents with professionalism, kindness and accuracy. Our clients are elected judges, law directors, clerks of court and mayors. In fact, it is important that we act almost as ambassadors for those elected officials. Our folks are taught and trained to always keep in mind that the people they are working with are voters who determine who our clients are going to be.

What is something Capital Recovery Systems does to ensure things run smoothly in upper management?

Just like other successful organizations, businesses and teams, communication is the key. Our upper management team thrives on communication. When you have great people in leadership positions and you empower them with the ability to make decisions, you have the brainpower of multiple experienced people. Our upper management is a total democracy. Rarely, if ever, are decisions made without the input of the entire upper management team. We keep that communication going with off-site meetings and planning sessions where we can mix a lot of work with a little play and fun over a day or two. And of course we meet on regularly scheduled intervals and urgent topics are discussed as they come. Again, having a democracy in a situation allows us to respond and deal with a bad or negative situation with a lot of thought and input from multiple viewpoints.

What is something an agency might do that would guarantee failure in government collections?

The kiss of death for a business like ours is when our clients are hearing negative things from their constituents. In this industry everyone has to be proactive in complaint prevention and great at reacting to complaints when they happen. I think that holds especially true for anyone in the government-only arena and is even more important than if we were collecting mainstream consumer debt. Our clients are very sensitive to each debtor. Whether or not they owe money, they are a taxpayer and a potential vote. If an agency struggles with complaints they will have poor client retention, which will eventually lead to great difficulty in obtaining new clients. These local governments all have their own associations and word spreads quickly among them. That word goes in both directions. If you’re doing a great job, it is the best and most effective marketing you can have. If the agency is creating complaint calls and shows a penchant for negative treatment, clients will run like the Amazon River during rainy season.

With compliance on the forefront, what are some special compliance considerations for government collections?

For me, one thought goes a long way in success. If you do things the right way and establish a culture that thrives on it, just about everything you want will work out. The biggest part of being compliant starts with how you treat people, in our case taxpayers and constituents, on the phone and in any verbal communications. Secondly, make sure that all of your written communications are compliant. One of the great things the ACA offers is the Collection Notice Review (CNR). Even if you have on-staff attorneys like we do, having your written communications get the approval via the CNR is providing a self-assuring redundancy to something that is critically important in avoiding law suits, sanctions and fines by regulatory bodies. Another important component of keeping compliant is call recording. I don’t just mean simply having the ability to record calls, but to use those recordings not only for compliance but for training and to help resolve complaints. I can’t tell you how many times we have had a client call, tell us of a complaint that a defendant registered that was nowhere near the truth, and we forwarded the call to the client. Most of the time we were able to turn a negative situation into a positive because we gave the client a picture of how we treat their constituents. I hear comments like, “Hey Craig, listened to the call, not only was he/she lying, but I was really impressed with how your representative handled the call.”

How does an agency maintain successful working relationships with government clients?

I like when I’m asked this question. During one of our off-site getaway meetings, we started off by asking ourselves that same question. “What do we have to do to ensure that our client relationships stay solid, long term and mutually beneficial to our agency?” Upper management staff just sort of began shouting out single word thoughts. As I was listening. I was jotting these single word ideas down. Before it was over we all agreed that flexibility, responsiveness, accessibility, tailoring, professionalism, accuracy and kindness would be our buzzwords. If we can meet the meaning of each of these words relative to our clients, we would have successful customer client relationships. One other area which I think is not normally used as part of a business plan or policy setting ideas is this: If we set our policies and guide our procedures in a way that guarantees that “What is good for us has to be good for our clients” never set a policy or process that no matter how good it might be for your business, if it does not enhance our clients’ business or make it better, then we will not set that process. It may seem difficult or you’re not focused enough on your own business, but I have found it to be not only simple but it creates enthusiastic discussions. It’s also energizing when someone comes up with an idea that another one of us can shoot down, because it does not enhance the client’s organization. It is actually a great way to discuss policies and procedures and also think things through thoroughly and completely.

What is the best way an agency could get into government collections?

The easiest way to answer that question is simply to say it is a difficult and tedious process where there is no such thing as immediate satisfaction. I will also say it takes some luck. As we all know, luck is when being prepared and opportunity end up in the same place. The vast majority of government collection RFP’s require prior experience with clients of similar size and scope. However, there are many opportunities to take advantage of where a competitive bid process is not required. These situations always occur in the local government arena. You have to put relationships to work with a solid plan to show the potential client (maybe your friend the mayor) how you can produce revenue that otherwise will never be collected. These can be very good times for agencies trying to break into government collections. “Starving” is the best one word description I would use if asked, what is the current status of local governments’ revenue needs? In fact the same applies to all levels of government from townships all the way through the Feds. Another positive aspect is even when revenues are good and government entities have rainy day funds, in the world of government revenues, there is never enough and the folks responsible for generating and spending those revenues will continue to look for ways to generate more. If I had one piece of advice to give relative to breaking into government collections it would be to start off at the local level, soliciting potential clients that do not have an RFP process or a current RFP. Again, use relationships to get in the door. Based on pricing structure, there are many opportunities to break-in without going through a competitive bidding process.

Are there any games or morale boosting practices you use to keep collectors happy and productive?

We do a lot of what the rest of the industry does as far as daily contests giving away gas cards, cash and gift cards. CRS uses a different type of bonus program than what the mainstream or majority of agencies use. Based on the fact that we are more of a customer service organization for local governments as opposed to a true collection agency, we use a quarterly profit sharing as the biggest incentive. Each quarter we take a percentage of total profits and divide it up among the revenue generating employees. Our folks on the phone are called customer service representatives (CSR) as opposed to “collectors.” We even advertise job openings for CSRs rather than collectors. This style of incentive really promotes team work. When others are responsible for the amount of “extra” money that goes into your pocket a culture of holding each other accountable is a blessing for us. In addition we have bowling night out five or six times a year. We provide food, beverages and all the bowling you want for four to five hours. Our staff really looks forward to these nights. We normally base them on office-wide performance. However if the numbers are not great, we tell them we are going to have a bowling night because their effort was great. Sometimes the greatest effort does not produce the end result you hope for.

How is Capital Recovery Systems involved in the community?

Our involvement in the community is mostly centered around education. We provide scholarship money for students going to accredited four-year colleges. We have a pretty strict criteria in awarding those funds. We have been doing it for the last 15 years.

One of the things I think we do differently is we go to great lengths to be active in our clients’ locations. Last year we raised money from our staff and CRS matched their funds times two. That enabled us to donate to an Alzheimer’s event in Knoxville, Tennessee, where our only tie was our client. CRS participated in nine fundraising events in 2016 in locations where we have clients. Our clients really appreciate our participation in their local charity activities. I am personally partial to homeless and hunger issues and we are active in those activities locally. We try to build a culture within this organization for our staff to see the value in, believe in and live by the words, “you get what you give.” It’s not easy in this day and age when funds for everyone are tight. But our group has been amazing in the level of participation.

We have a very high participation rate in the local United Way payroll deduction program. This program allows them to pick what charity the United Way directs their funds to. My younger brother is very active and a volunteer leader for a South Carolina chapter of Special Operations Wounded Warriors (SOWW). They serve Wounded Warriors of the United States Special Operations Forces with charitable outdoor events, mostly getting disabled veterans out in the field to hunt, which they would never be able to do without SOWW. I’ve seen the guys when they get back from the hunt and it looks like they have just been given new life. We hold a fundraiser each year and for the past five years CRS has been very active with them. Two of us just signed up to participate in their annual golf outing in Myrtle Beach, South Carolina.

One thing I am extremely proud of is how our employees really stand up when a co-worker suffers from a difficult situation. One example of many is one of our staff had their home broken into two days before Christmas. You can imagine that every gift under the tree, among other things, was stolen. This bunch came to her need and made sure that her children had a Christmas. 100% of the staff helped out in some way or another and they saved the family’s Christmas with next to no time to get it done.

What do you enjoy doing in your free time?

My biggest enjoyment comes from working in my yard and gardens. It’s relaxing, satisfying and very therapeutic for me. I’m also a big fan of high school football and go to games locally and throughout the state of Ohio. Most recently my wife and I have taken up handgun training and shooting. It is really a great hobby and a way to have an activity with your spouse. We go to the range two to three times a week. Of course it has turned into a competition which makes it twice as fun… when I win that is.