Regulation F has received a significant amount of attention from accounts receivables teams since its initial announcement. With increased scrutiny on the industry and a deference for consumer preferences,, AR teams must find innovative ways to increase the efficiency of their current communications strategy.
As we are all aware, the Consumer Financial Protection Bureau (CFPB) announced that Regulation F, relating to the Fair Debt Collections Practices Act (FDCPA), will take effect by the end of November 2021 instead of January 2022 as initially proposed. Businesses will have to transform the way they conduct outreach relating to financial matters before the deadline is reached.
The impact the new regulation will have on the industry
The regulation aims to reduce the inconvenience and increase preferred methods of communication with its customers. The legislation will require that businesses record and adhere to customer preferences once they are made clear and provide an option for customers to change their preferences as they see fit. Additionally, a link to a self-serve portal will be essential so customers can make payments without uninitiated communication with brands.
While this represents a positive step forward for customers, businesses are concerned about the impact it will have on their ability to settle accounts receivable balances. A recent report found that debt claims issued by businesses to their customers were the most common civil case in 9 out of 12 surveyed states.
Here are three ways businesses can continue to conduct financial communication with their customers in an effective, efficient, and compliant manner.
How businesses can maintain collection efficiency by increasing communication quality
Use digital communication to reach out to an increasingly tech-savvy customer base
Regulation F demands that businesses reach out to customers through a channel aligned with their customers’ preferences. A report by McKinsey and Company revealed that customers are increasingly in favor of being contacted through digital channels. Less than a quarter of customers across risk profiles preferred letters as a method of communication with brands. Clearly, there is a demand from customers to be contacted by brands through modern channels like text messages and chat applications.
This shift is exceedingly positive for businesses. The same report also revealed that customers contacted through digital channels make partial or full payments faster and at higher rates than customers contacted through traditional communication channels.
Optimize outreach by choosing the right time and method to communicate with customers
The latest rules are a clear signal that regulators are increasingly protective of customer experiences and disapprove of repeated unnecessary communications. This means that companies need to make the most out of each interaction with their customers. Traditional methods of communication often involve a time lag between a message being delivered and received. With digital channels, companies can choose to communicate with their customers at their preferred time and through their preferred channel. This increases the likelihood of customers responding to the message and taking action based on the information shared with them.
Maintain an omnichannel presence to reach out to customers with divergent communication preferences
Despite the shift in customer preferences, businesses must ensure that any modernization in communication strategy does not come at the expense of less technologically savvy customers. These preferences will become an even more important consideration once Regulation F is enacted, as customers can demand that brands limit communication to channels such as SMS instead of push notifications or chat applications. To satisfy the needs of customers from all demographics, businesses must adopt an omnichannel approach to communication in the same way that many businesses have done for service delivery.
Accounts receivable communication must be conducted in a way that maintains a positive relationship between brands and their customers. The introduction of AI-based white-label software shifts that burden to third-party vendors while keeping your brand front and center during customer outreach. Modern communications strategies must also remain agile to respond to divergent customer preferences and changing customer demographics.
To find out how white label communications software can help you remain compliant in an evolving regulatory customer communication landscape, schedule a demo with us today.
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