Automated Pre-Collections System for Low-Value Debt Recovery
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Solution Overview
Problem
Current collection practices are impractical for low-value debts, such as returned ACH items, due to high labor costs and inefficiencies, especially when dealing with electronic payments that are not guaranteed, leading to material losses for originators and merchants.
Innovation Solution
An automated pre-collections system that integrates with order processing systems, using computer software, rules, and statistical analysis to efficiently collect low-value debts, allowing real-time payment processing and reclamation of delivered products or services, without requiring human intervention.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If traditional collection systems are used to collect low-value debts, then debt collection can be performed, but labor costs exceed the debt amount making it impractical
Solution Approach 1:
The system enables automated self-service collection by integrating with order processing systems to automatically identify debtors when they contact the company, route them to payment channels, and process payments without human intervention. This automation eliminates the need for manual collection efforts on low-value debts while maintaining effective collection rates.
Solution Approach 2:
The patent replaces manual mechanical collection processes with automated electronic systems. The integration between order processing and collection systems allows automatic debtor identification, routing, and payment processing, substituting human labor with automated software-based mechanisms that handle high volumes of low-value transactions efficiently.
2Reliability
If manual collection processes are used for high-volume low-value transactions, then individual debts can be collected, but the collection process becomes inefficient and costly
Solution Approach 1:
The system creates a universal collection platform that handles multiple transaction types and values through a single integrated system. The automated platform can process high-volume low-value transactions alongside traditional collections, providing multi-functional capability that improves both efficiency and accuracy across all collection scenarios.
Solution Approach 2:
The patent changes the operational parameters of collection by implementing automated routing based on transaction characteristics. The system automatically adjusts collection approaches based on debt value, transaction type, and debtor behavior patterns, optimizing the collection process for different scenarios without requiring manual intervention.
3Loss of time
If real-time payment processing is implemented, then immediate debt recovery is achieved, but system complexity increases
Solution Approach 1:
The patent merges the collection system with the existing order processing system, combining two functions into a unified platform. This integration allows real-time payment processing while leveraging existing infrastructure, reducing the complexity that would otherwise result from implementing a completely separate real-time collection system.
Solution Approach 2:
The system performs preliminary actions by pre-configuring payment channels and routing rules in advance. When a debtor contacts the company, the system has already prepared the appropriate payment pathways, enabling immediate payment processing without requiring complex real-time decision-making or system configuration during the payment moment.
Data Source
AI summary
A pre-collections system identifies debtors when they contact a company for a new purchase. A customer service representative (or other automated process) takes payment for the prior debt in real time. The pre-collections system is tightly integrated with an order processing system. Order processing system channels (web site, IVR, CSR, etc.) are enabled to redirect the customer debtor into a corresponding pre-collections system channel. Customers are routed back seamlessly in real time to the point in the order processing system where they left off. The customer is re-instated immediately when their payment is cleared. The system keeps track of blacklisted customers. Logic determines whether to resubmit an item, reclaim a product or service or to immediately collect upon the debt.