Lecture series
Collections: from reminder to recovery
When a borrower falls behind, what a lender does next decides how much is lost and how the borrower is treated. This course explains how arrears are measured, how lenders prevent missed payments, contact borrowers and agree payment plans, how late collections and recovery work, the rules on fair collection in different markets, and how collections is run and measured. Eight lessons.
8 of 8 lessons published. Lesson 1 is free to read.
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- 01What collections are: from a missed payment to recoveryCollections is the work a lender does when a borrower does not pay on time: reminding, contacting, agreeing a way back to regular payments and, when that fails, recovering what can be recovered. This lesson defines collections, sets out its stages, explains days past due as the common clock and the 90-day point used to identify non-performing loans, and shows how rules on treating borrowers in difficulty and on contacting them differ between markets.
- 02Measuring arrears: days past due, buckets, roll rates and cure ratesTo manage arrears, a lender needs to know how late its loans are, how much money stands behind the late ones, and how loans move from one stage to the next. This lesson explains days-past-due buckets, portfolio at risk and why it counts the whole balance, how a growing book can flatter the figures, and how roll rates and cure rates describe the movement of loans between buckets.
- 03Before the first missed payment: reminders, payment design and early warningArrears that never happen cost nothing to collect. This lesson explains why prevention comes first, what a randomised experiment in the Philippines found about text-message reminders, what a study in India found about how often borrowers repay, the choices a lender makes in designing payments, and how early-warning signals and a watch list find borrowers under strain before they miss a payment.
- 04Early collections: contact strategy, channels and collection scoresMost borrowers who miss a payment can be brought back to regular payments if the lender reaches them early and in the right way. This lesson explains what the early stage of collections is for, how borrowers in arrears are grouped, how collection scores rank them and why the borrowers most likely to pay are not always the ones a call helps most, what a field experiment in Indonesia found about the content of a message, the rules on channels, and how to test a contact strategy.
- 05Hardship and forbearance: payment plans, restructuring and how they are countedWhen a borrower cannot pay as planned, changing the terms of the loan can help both sides, or it can hide a loss for a while. This lesson explains how a lender assesses what a borrower can afford, the short-term and long-term measures it can offer, what makes a measure viable, how a longer term changes the instalment, how loans with eased terms are counted and when they stop being counted as such, and how markets differ in what they require of lenders and in the help available to borrowers.
- 06Late collections and recovery: agencies, legal action, collateral and debt saleWhen reminders, contact and payment plans have not brought a loan back, the lender has to decide how to recover what it can. This lesson sets out the options a supervisor expects lenders to weigh, how outside agencies and servicers are used and controlled, what legal action and collateral really return once time and costs are counted, how to compare the routes with a recovery-rate formula, and what changes when a loan is written off or sold.
- 07Fair collection conduct: the rules on contact, pressure, disclosure and complaintsCollecting a debt puts a lender, or someone acting for it, in direct contact with people under strain, and the rules on how that contact may be made are among the most detailed in consumer finance. This lesson explains the common principle of fair treatment and responsibility for agents, and then, comparing the United States, the United Kingdom, Thailand and Malaysia, the rules on when and whom collectors may contact, what counts as harassment and undue pressure, what collectors must and must not say, privacy, and how complaints are handled.
- 08Running collections: costs, write-off, provisions and the numbers to watchCollections is an operation with its own costs and results, and what it achieves flows straight into the accounts through provisions and write-offs. This lesson explains how to measure what collecting costs and returns, how arrears turn into provisions under expected-loss accounting, when a loan is written off and what happens to recoveries after that, the ratios that link losses to the book, and the numbers a lender should watch every month.
Quiz and certificate 10 questions; those on lesson 1 are free to try. Read every published lesson and score 80% or more for a certificate of completion.
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