Wyoming, MN – September 21, 2015 – Strategic planning is an essential first step in the budgeting process. A solid strategic plan lays out the direction and goals of the credit union, as well as criteria for actions to reach the goals. The amount of money available determines, to a large degree, what options can be entertained. As goal setting moves forward, if the credit union doesn’t have the budget to support its strategic plan, it will need to either modify the goal or find a financial means to support it. This is especially important during times of growth, when the question can be whether to add to staff, or outsource portions of the workload.
A question that can be asked is ‘what is real expense of adding to staff vs outsourcing?’ In a recent analysis performed by The Loan Service Center, a significant savings was found in outsourcing all or part of collection department functions. Below are the findings:
- U.S. Department of Labor statistics show that the average yearly salary for an experienced collector is $36,000.00.
- Industry statistics report that recruitment, hiring and training a new employee is estimated to cost $3,500.00, with the training portion of the hiring process an average of 31 hours.
- Employee benefits, office space, office equipment and vacation/sick leave total $6,000.00 per year.
- Harvard Business School reports that there is an average of 6.2 months of reduced efficiency while the employee learns to reach their productivity goals. Even with an experienced new hire, there is a time period of learning new procedures and processes which impacts overall effectiveness.
The results: the first year cost of a new, experienced collection department employee can equal $45,500.00.
Conversely, a fully trained and skilled Loan Service Center collector, managing a queue of 150 accounts would cost $27,000.00 with no additional expenses. The analysis clearly demonstrates that outsourcing all or a portion of credit union collection department needs can be a cost effective strategy.
CU Recovery, Inc. is a full service collection agency, working exclusively for credit unions, dedicated to maximizing recoveries on charged off loans. The Loan Service Center, Inc. provides staffing solutions for credit union collection departments to minimize losses on their delinquent active loan portfolio. The CU Recovery Collection Academy is held in October of each year and is a resource for continuing education to assure the success of Credit Union collection departments in meeting their member service and delinquency reduction goals. For more information: www.curecovery.com