WO2004029850A2

WO2004029850A2 - System and method for debt collection

Info

Publication number: WO2004029850A2
Application number: PCT/NO2002/000345
Authority: WO
Inventors: Roar Bratvold; Erik Sekkelsten
Original assignee: Replace As
Priority date: 2002-09-26
Filing date: 2002-09-26
Publication date: 2004-04-08
Also published as: AU2002328040A1

Description

SYSTEM AND METHOD FOR DEBT COLLECTION

INTRODUCTION

The present invention concerns a system and method relating to debt collection and especially relating to an online method and system for placement of single claims and portfolios.

BACKGROUND

The debt collection industry is regulated by legislation in different markets. The legislation is different from market to market, but has a lot of common rules due to activities against debtor. Debt collection industry works similar across different markets. Customer's relation is directly to a collection agency, and all claims and portfolios are handled inside same agency.

The service offered by collection agencies is similar due to actions and tools. Difference between collection agencies performance is difficult to overview for customers, and customers' knowledge is based on earlier experience.

Production structure and methods in debt collection industry are mainly production of letters, contact with debtor by phone, and legal action done by government on behalf of collection agencies. Collection agencies keep a single claim or claim portfolios in the total process, without time limit or replacement to other collection agencies.

Collection agencies offer more or less the same services and compete internally on capacity and technology. Collection techniques are based on the legislation and the historical and cultural way of working.

Types of debt collection are divided in to main groups: 1. Bulk collection - small amounts large volumes

2. Legal collection - large amounts small volumes

Production standard in collection industry are at present based up on the following structure: o No limit in handling time o Claims are transferred to debt surveillance between 6 and 12 months after receipt of case and due to this collection agencies increase their profit enormously as the customer must pay for additional service o No or few demands on activities from customer o Focus on success rate after closed claim or portfolio o A service agreement makes it difficult for customer to influence the process o Standardized

The market and the customer are not seen as loyal to their existing agency and are willing to change partner if a better solution comes up.

SUMMARY OF THE INVENTION

The present invention is conceived to provide an online, automated claim/debt col- lection process solving or at least alleviating the problems outlined above.

In accordance with a first aspect the invention provides a system for debt collection comprising a central database having a client register, a claim register and a collection agency register; a central server comprising a network interface to a communication network, a file converter module converting and transporting data between the central server and external data systems, a scoring module placing a single claim or a claim portfolio to a collection agency selected from the collection agency register based on statistical processing of claim data; and a client interface for registering new claims or claim portfolios and interacting with the central data- base.

The file converter module may include a program for converting data files from any layout and record description to a central server data system internal layout and a FTP file transport system. A script database storing data file scripts and a secure mailbox function and database for handled files may also be included in the file converter module. Historical data from all the collection agencies regarding activity data and financial movements data for all the claims ever registered in the system is contained in a score card module in the scoring module. The score card module may further include rules used in processing claim data. Further, a decision module may be in- eluded in the scoring module.

The communication between a client, the debt collection system and agencies may be implemented on a telecommunication network. The client interface is then a web page integrated with the central systems and updated from the central sys- tems online. A report module generating client reports as regards success rate of the single claim or portfolio is also included in the client interface.

In a further aspect the invention provides a method for debt collection comprising: receiving a signal in a central data system representing a single claim or a claim portfolio from a client, the client being located at a user device on a communication network; performing (by the central system CPU) a statistical analysis of the claim or claim portfolio and selecting a collection agent from an agency register in a database in the central system based on statistical analysis of claim history data; transmitting the claim or claim portfolio to the selected collection agency on a com- munication network; and receiving updated claim or claim portfolio data from the collection agencies located at a agency device at a communication network providing an update at the database.

The signal may represent a file containing the claim or claim portfolio. The file is forwarded to a file converter module converting the file to a central format and inputting the converted file to the central data system. Statistical analysis is performed in a scoring module and the analysis result verified against client rules from a client register in the central system database before selecting a collection agency. The claim or claim portfolio is in this embodiment automatically transmitted to the collection agency selected for that claim or claim portfolio as a signal on a communication network. If the communication network is Internet, the signal is an email file attachment and the updated claim or claim portfolio data is transmitted as an email file attachment. Interaction between the collection agencies registered in the collection agency register and the central system is provided by a collection agency web module, automatically generating a file with updated claim or claim portfolio data upon receiving a claim or claim portfolio from the central system. The updated claim or claim portfolio data from the collection agencies are received automatically at predefined intervals according to a service agreement. Interaction is also provided between the user and the central system by a client web module.

In an even further embodiment the invention provides a computer program readable by a machine, which when loaded into the internal memory of the machine makes the machine execute the method as outlined above. The invention also pro- vides a program storage device readable by a machine and encoding a program of instructions executing the method described above.

This concept is based on using more than one collection agency handling the claim by re-placing, and to establish competition between collection agencies to in- crease success rate. The system and software handling a service between the customers and cooperating collection agencies include three different systems connected together to the final product. The three systems are a central data system, a scoring system and a web system. The present invention provides a unique service in debt collection industry. Based on using scorecards and prosecution time limits in placement of single claims and portfolios, the customers will get access to different debt collection agencies and the agencies specialization when using the invented system. The invention may initiate a change in the industry standard for the debt collection industry by offering customers a new structure in debt collection.

Customers are signed up directly to the system and all relations are kept between the system and the customer. All specialization and different performance is balanced in the total group of cooperating collection agencies, and the customers will get the benefit of increased competence and performance inherent in the system. This may change the position for collection agencies from a full service structure with sales and CRM (Client Relation Management) (full service means that the agency sells in the client, follow up the client and provides production (prosecution) of the claims provided by the client) to a production orientated structure producing on behalf of the online collection system. The system is implemented using specially developed data systems. The different data systems are by integration able to fulfil the total service and production between all parties. The different data systems are not able to offer any service alone. The data systems are technically integrated to data systems used by all cooperating collection agencies. All commu- nication on claims or portfolios is thereby performed inside the systems.

BRIEF DESCRIPTION OF DRAWINGS

Example embodiments of the invention will now be described with reference to the following drawings, where Figure 1 is an overview of an example system implementation of the present invention illustrating the relationship between the invented technology and customer and collection agency, provided by the present invention,

Figure 2 is an overview of the implementation in Figure 1 in a network configuration according to an embodiment of the present invention, Figure 3 is a block diagram illustrating the scoring system and process according to an embodiment of the present invention,

Figure 4 is a block diagram of the database content in the online collection system in Figure 2 according to an embodiment of the invention,

Figure 5 is a block diagram of the file converter module in Figure 2 according to an embodiment of the invention, and

Figure 6 is an overview of a web application and the interaction between the different systems according to an embodiment of the invention.

DETAILED DESCRIPTION An overview of an embodiment of the collection system and the interaction with the clients and collection agencies are shown in Figure 1. In Figure 1 the clients interact with the collection system through a web interface. The data systems of the collection system interact with the collection agencies assigned to the collection system. The network system and the client - server configuration indicated in Figure 1 are outlined in further detail in Figure 2. The clients access the collection system through Internet using e.g. ISDN/ADSL or a telecommunication network 102 in general, by using e.g. a personal computer a handheld portable device like WAP or any other device with CPU, memory, input and output units and means for connecting to the network. The collection agencies also interact with the collection system central server 100 over the communication network 102 by using a personal computer or any other device with CPU, memory and input and output units. The collection agencies connects to the collection system at defined intervals according to a service agreement between the agency and the web based collection 5 system, for transmitting a file to the web system including information concerning activities and economic transactions that has taken place since the last transmission. The web based collection system also transmits updating information and claim portfolios to the collection agencies in files.

ιo The collection system is constituted by modules as shown in Figure 2 and stored on a central server 100. The data system includes a central system 104, a scoring system 103, a file converter 105, a web application 110 and a report generator 106. An internal system operator, can access the collection central data system via the web interface 110 for performing necessary system maintenance. The int- i5 ernal system operator (administrator) may register, correct or alter data. This include:

- register/correct/alter agency information,

- register/correct/alter clients, debtor and cases,

- register/correct/alter conditions, client agreements and agency 20 agreements, and

- register/correct/alter client web access.

The administrator has access to and may register/correct/alter all information in all the registers (claim 104-2, client 104-1 , agency 104-3, debtor 104-4).

25

The different modules will be described in detail below.

Central system 104

The central system is shown in Figure 4 and is the main part of the collection data 30 systems. The central system contains the following database tables:

o A client register (104-1 client register) including information regarding type of agreement between the collection system and the customer and special conditions regarding debt collection structure and the use of different collec- tion agencies. This is shown in Figure 4 as the fields: basic data 104-1.1 (e.g. name, address, telephone number, email, contact person, account number), conditions 104-1.2 (type of agreement), products 104-1.3 (fixed placement, replacement, single claim) and limits 104-1.4, respectively.

o An agency register (104-3 agency register) comprising information regarding terms and conditions between the collection system and each collection agency regarding production level, products, and handling limits. This information is contained in the fields: basic data 104-3.1 , conditions 104-3.2, products 104-3.3 and specialization 104-3.4 in Figure 4. The information in these fields is almost the same as for the client register, but the size of the main claim may be included in the product field.

o A claim register (104-2 claim register) containing information concerning - import of data from the file converter system, the web application or directly from customer,

- import of data from the scoring system,

- export of data from the scoring system to actual collection agencies and the central data system, - import of data from collection agencies and central data system,

- export and updating of claims or portfolios to collection agencies,

- detailed information on claims and portfolios, automatically invoice of commission from collection agency and customer and automatically tracing and return of claims in overdue limit of time from collection agencies. This information is summarized in the database tables: basic data 104-2.1 , activities 104-2.2, financials 104-2.3 and legal information 104-2.4. Basic data is invoice specification, financials are the economic transactions at an agency, activities reported from an agency and legal information is the information appearing from the activities reported from the agency.

Debtor (debtor register 104-4) comprises all basic data related to debtor, type of debtor - consumer / commercial. The central system 104 includes information on clients, claims, and collection agencies. Data and updates from collection agencies are handled by the central system 104 database. Instructions regarding time limits are given to the collection agencies from this system. The central system keeps control of ail specializations in products and production structure. The system with its different modules will be explained in detail later.

Examples of rules and regulations:

- Products selected by clients - Products and collection specialization selected by collection agency

- Financial conditions of client and collection agency

- Time limits and collection rules

The client agreement includes information regarding registration fee, provision and annual fee. The registration fee and provision depend on product type (e.g. telephone reminder, collection) and size of claim, while the annual fee is fixed for each client.

The scoring system 103 The scoring system, which is shown in Figure 3, is an important part of the collection system's data system. The main function in the scoring system is to place single claims or portfolios to collection agencies. This placement is done after statistically processing the data from said claims or claim portfolios, and the system's mission is to place claims within those collection agencies showing best results for the actual claim.

The scoring system is a dynamic statistical tool developing recommendations of collection agencies to handling debt collection, and includes the following functions: o analyzing data and information in all new claims and portfolios o analyzing all activities and results done by collection agencies in all claims and portfolios o policy rules for placing new claims and portfolios o placement system to secure credibility o placement system to secure dynamic development and correction

The scoring system interacts with the file conversion module and the replace sys- tern as indicated with arrows in Figure 3. The functions are explained below.

The scoring system selects the best performing collection agency, i.e. the collection agency with the best historic data. The historic data is experience data from the replace system as regards this collection agency's performance with different types of claims and external data such as tax assessment data, payment remarks, information from the register of business enterprise and the national register. Based on this information a scoring module calculates for each agency, the probability that the agency will solve the problem. The agency with the highest probability will be assigned the case, but not as a general rule. The agency with the high- est probability score must be challenged regularly to be able to update the scoring module performance data. New claims are received from the central system 104 through the file converter 105. In-data 103-4 is the scoring system interface for transferring data from the file converter module to the scoring system score card module 103-1 for processing.

The score card module 103-1 contains a database with historical data from all the collection agencies connected to the online collection system. These historical data are data regarding detailed activities and financial movements from all the claims ever handled by the system. The data in the history database is updated on a daily basis from the collection agencies 108, or at an interval according to the service agreement as explained earlier.

The score card program module 103-1 uses policy rules 103-3 in the scoring process. Policy rules are e.g. demands from the clients, and re-placement strategies for portfolios. Demands form clients are registered manually or automatically in the central system. The clients enter information into the system through the web interface 110. The demands from clients are related to the product, but may also include excluding certain agencies from handling claims from that client. From the agency the policy rules are mainly related to main claim and product. The main policy rule is the prioritized values used in scoring. An example of such a prioritized value is that success rate is put before geographical performance.

An out-data module 103-5 provides an interface between the score card module and the central system 104 and provides transfer of all available information to the central system 104 from the score card module for statistical use. Decision 103-2 is the scoring system result. The scoring system generates a list of possible agencies for the particular claim or claim portfolio. The list is generated based on the probability for the agencies to solve (collect the money successfully) that particular claim or claim portfolio. The probabilities are calculated based on data from all the earlier claims handled by the system. Based on this decision the actual claim or part of a portfolio is transferred to the collection agency selected by the scoring system. However, before this transfer, the decision is checked against the rules stored in the agency register 104-3 and client register 104-1 in the central system 104 database Examples on such rules are e.g. a client not wanting to use a particular agency or that the agency has limits as regards main demands and products. This information is not part of the scoring model.

File converter module 105

The file converter module is a system converting and transporting the data files between the parties, i.e. the clients and the collection agency and the collection system itself. The system secures and protects the transported data, and includes the following functions and submodules: o A routine for converting data files from all different layouts and record descriptions to the collection data system internal layout. o A script database for saving developed scripts of data files o A transport system based on FTP technology o A secure mailbox function with receipt and database for handled files.

The handled files include files transmitted from the central data system to an agency with client information and files with claim information regarding claims the agency is to register or read into its data system, and files transmitted from an agency to the central data system regarding claim history and economic move- ments of claims prosecuted by the agency transferred from the central data system. The receipt is a confirmation that a file is sent and received, and is issued both to the sender and recipient or just one of said parties. The receipt is also part of the agreement between the collection system and the agencies.

The file converter module converts and transfers data between internal and external data systems. A script converter is used to convert data files to the internal record description of the central data systems. All scripts are saved inside the system and the file converter program automatically converts the files input from the user/client and collection agencies to new files, which can be handled by the central systems. The file converter provides secure transport of all data files between the systems (client, collection system, collection agencies). A file example with data fields and explanations is shown below.

Datafield T L Explanation

Record type* A l l "A" (= Case / Debtor) Creditor no N 6 2 The agency creditor number (connections to existing creditor in agency)

Reference no A 20 8 Client no/member no in reskontro or another

Field is clients reference in the system

Namel A 30 28 First name (debtor)

Name2* A 30 58 Surname / company name / full name (debtor)

Addressl A 30 88 Normal address

Address2 A 30 118 c/o if this exists

Postal code* A 7 148 Used for enquiring place

Ident A 13 155 Org. no for business (format: 9xxxxxxxx)

Pers. no for person (format: DDMMYYnnnnn)

(blank if unknown)

Tl h. private A 20 168 Telephone number Start date A 8 188 Start date on subscription (e.g. date of purchase) Filler A 2 196 Blank Category A 1 198 P for private and N for business City A 30 199 City. Not mandatory. Normally overruled by inquiry on postal code

Repl. case no* A 7 229 Replace case number Product A 1 236 Product of case. I=collections, F=before / reminder collections, 0=surveillance

As from above the data positions are clearly defined. If the file contains errors or is not in this format, the reading of the file will be incorrect or may not be read by the central data system at all. The converter module converts the file to a correct, readable format. The file converter 105 functions as interface between the central collection system and the collection agency computers. A program updating the collection agencies' databases upon receipt of new claims and claim portfolios, and also for extracting data from the agency database for transmission updating data to the collection system is residing on the collection agency computers. FRC is a program securing communication and integration between the collection system and the collection agencies. FRC translates the collection system file format to the format desired by the collection agency, and vice versa. The FRC program also handles file transport and issuance of the receipt to transmitter and receiver.

Web applications 110

The web application gives the clients access to information of all their single claims or portfolios. The web application is integrated in the central system and is updated from this system online. Clients are able to make registration of new claims directly in the system. The web application contains the following functions and submodules: o registration interface for registering new claims or portfolios manually or electronically o standardized report generator module showing success rate on debt collec- tion services o communication module between customers and collection agencies o detailed information on activities in each claim, e.g. details regarding prosecution and which agency has performed each specific activity o detailed information on payments in each claim, e.g. from debtor, expenses, interest rate and fees.

An example embodiment of the registration function in the web application will now be described. When registering a new claim, debtor category must first be entered. The program differs between a private person and a firm as debtor. Also, the re- gistered claim must also not be disputed. When debtor category has been selected, a registration interface adapted to the debtor category appears. There are four alternatives as to handling the claim by the system.

- Telephone reminder o If the client wants the central system to initiate a call to the debtor before the collection process is initiated, this alternative is selected. It is assumed that the claim is overdue. Also, to initiate a call the debtor telephone number must be registered together with the claim. If the claim is still not paid and further follow-up is desired, the claim must be registered again.

- Collection reminder o The collection agency selected by the scoring system issues a collection warning with a 14 days term of payment, before the claim is transferred to the collection process. Before collection is initiatedjn this system a co] ec- tion warning must have been sent, and if this has not been done this alternative must be selected. A collection warning shall include a 14 days term of payment and clearly written that lack of payment will result in transfer of case to collection agency.

The information above is in accordance with Norwegian regulations in this area. The collection system will be adapted to the regulations in the actual countries.

- Collection o Assumes that a collection warning has been sent in accordance with the national collection regulations.

- Surveillance o Assumes that the claim has been handled by a collection agency.

Debtor information is entered in accordance with the fields in the registration inter- face. It is important that the information entered by the user exhibits good quality. This is of importance for the collection agency handling the claim, as this will increase the success rate.

Invoice information must also be entered. This includes the invoice posting date and term of payment together with interest rate. The term of payment must have been exceeded in order to be able to register the claim. This is automatically checked by the registration interface. After registration has been completed a file with all the entered claims are automatically created by the web interface 110. The file is then read by the replace central system 104 and stored in the database.

The web application 110 is secured with a unique username and password for each user. The application also provides information to clients on claim or portfolio level, and is a fully interactive system. All information inside the web application is updated from the central data system 100, 104.

Crystal report

The crystal report is standard software for developing special reports. The system is integrated in the central data systems to develop reports according to the clients wishes and develop benchmarking based on the information inside the system. The report generator extracts information from the relational tables in the central system database. The tables to be used are controlled by the central system 104.

Examples

Example 1. Transmission of file from a key account client.

A. Client sends a file on email to the replace central system 104 on the central server 100.

B. The file is forwarded to the file converter module 105 on the central server 100 and processed by the converter program, converting the file to the replace file format.

C. The processed file is input to the replace system and read.

D. The information is feed into the scoring module 103, processing all the claims in the file and calculating success probabilities. These are verified against the rules for the client read from the database in the replace system 104. E. The claims are transferred automatically to the collection agencies selected by the scoring module as file attachment to an email, a FTP-file or another electronic network communication mechanism 102. F. The collection agency reads the file into its system and issues a request for payment, which is an activity governed by law. However, this step is adap- ted to common laws for the country in question. A file with activities and economic transactions that has occurred as regards claims assigned from the central system since the last update is also automatically produced. This file is transmitted to the central system 100 via a communication network, e.g. as an email attachment, FTP-file or any other means known in the art. G. The central system 104 receives the updated information from the collection agency, reads the file into the system, which then initiates an update of the information stored in the central database. After this update has been com- pleted the updated information is available also through the client web available for the clients 110.

Example 2. Assignments are registered on client web by subscriber client

A. The client logs in on client web with username and password.

B. Claims are registered on the client web 110 by filling in data as explained.

C. File with new assignments registered on the client web, 110, is read into the central systems 104.

D. The scoring model 103 processes the assignments, and the recommendation from the scoring model is verified against the rules for the client in the central systems 104.

E. Assignments are distributed to the selected collection agencies as a file sent automatically as email attachment or by any other communication means 102. F. The collecting agency receives assignment and reads the file into its system. The agency issues payment request if required by national laws. A file with activities and economic transactions that have occurred since the last communication to the central system 104, is created and transmitted to the central system 104 as e.g. email attachment. G. The central system 104 receives file with updated information from collection agency. The file is read by the central system, and the claim register 104-2 in the central database automatically updated. The updated information is then available for the client through the client web. Example 3. A client reports a direct payment via client web.

A. The client logs into the client web 110 by using the unique username and password. B. The desired claim is identified by filling in adequate information in the searchable fields provided by the client web. Searchable information may be assignment number, client reference number, invoice number, debtor surname/company name or date registered. The function "direct payment" is then selected by the client. C. The client enters data regarding this payment. This initiates running of a program on the client web, creating a note which is then transmitted to and stored in the claim register in the central system 104. This initiates transmission of the created note to the agency assigned to this claim as an email. The email address is requested from the agency register. D. The agency receives the email and the information may then be automatically entered into the accounting system. F. A file is also created including activities and economic transactions occurred on assignment from the central system since the last run of corresponding action. G. The central system 104 receives file with updated information from collection agency. The file is read by the central system, and the claim register 104-2 in the central database automatically updated. The updated information is then available for the client through the client web.

Having described specific embodiments of the invention it will be apparent to those skilled in the art that other embodiments incorporating the concepts may be used. These and other examples of the invention illustrated above are intended by way of example only and the actual scope of the invention is to be determined from the following claims.

Claims

C L A I M S

1. A system for debt collection comprising:

- a central database (104) comprising a client register (104-1 ), a claim register (104-2) and a collection agency register (104-3),

- a central server (100) comprising:

- a network interface to a communication network,

- a file converter module (105) converting and transporting data between the central server and external data systems, - a scoring module (103) placing a single claim or a claim portfolio to a collection agency selected from the collection agency register (104-3) based on statistical processing of claim data, and

- a client interface for registering new claims or claim portfolios and interacting with the central database.

2. System according to claim 1 , wherein the file converter module (105) comprising a program for converting data files from any layout and record description to a central server data system internal layout and a FTP file transport system.

3. System according to claim 1 , wherein the file converter module (105) further comprising a script database storing data file scripts and a secure mailbox function and database for handled files.

4. System according to claim 1 , wherein the scoring module (103) comprising a score card module (103-1) with historical data from all the collection agencies, the historical data comprising activity data and financial movements data for all the claims ever registered in the system.

5. System according to claim 1 , wherein the score card module comprising rules (103-3) used in processing claim data.

6. System according to claim 1 , wherein the scoring module (103) comprising a decision module (103-2).

7. System according to claim 1 , wherein the communication network is a telecommunication network.

8. System according to claim 1 , wherein the client interface is integrated with the central systems and updated from the central systems online.

9. System according to claim 1 , wherein the client interface comprising a report module generating client reports as regards success rate of the single claim or portfolio.

10. System according to claim 1 , where the client interface is a web page.

11. A method for debt collection comprising

- receiving a signal in a central data system representing a single claim or a claim portfolio from a client, the client being located at a user device on a communication network,

- performing (by the central system CPU) a statistical analysis of the claim or claim portfolio and selecting a collection agent from an agency register in a database in the central system based on statistical analysis of claim history data, - transmitting the claim or claim portfolio to the selected collection agency on a communication network, and

- receiving updated claim or claim portfolio data from the collection agencies located at a agency device at a communication network providing an update at the database.

12. Method according to claim 11 , wherein the signal represents a file containing the claim or claim portfolio, the method comprising forwarding the file to a file converter module 105 converting the file to a central format and inputting the converted file to the central system.

13. Method according to claim 11 , further comprising performing the statistical analysis in a scoring module and verifying the analysis result against client rules from a client register in the central system database before selecting a collection agency.

14. Method according to claim 11 , comprising transmitting the claim or claim portfolio automatically to the collection agency selected for that claim or claim portfolio as a signal on a communication network.

15. Method according to claim 14, wherein the communication network is Internet and that the signal is an email file attachment and the updated claim or claim portfolio data is transmitted as an email file attachment.

16. Method according to claim 11 , comprising providing interaction between the collection agencies registered in the collection agency register and the central system by a collection agency web module, the agency web module automatically generating a file with updated claim or claim portfolio data upon receiving a claim or claim portfolio from the central system.

17. Method according to claim 11 , wherein updated claim or claim portfolio data from the collection agencies are received automatically at predefined intervals.

18. Method according to claim 11 , comprising providing interaction between the user and the central system by a client web module.

19. A computer program readable by a machine, which when loaded into the internal memory of the machine makes the machine execute the method according to claim 1.

20. A program storage device readable by a machine and encoding a program of instructions executing the method according to claim 1.