Collection Process Assessment is a system used to analyze the standards of a particular method. This process is used by various organizations to compare the standards of a specific service and the standards delivered.
The service process that is delivered will be compared to the standards which are followed according to best practices. This would apply to procedures where there is a legal requirement for collection. When a company or organization borrows a loan from a financial institution, the parties to the loan agreement will enter into a term sheet which will contain the loan amount, maturity period and due date of the loan. When the company has to repay the loan, the bank will approach them through non-legal methods. If they are not able to pay the loan through the non-legal techniques, then the financial institution will use legal means.
In the above case, the collection process assessment will be comparing the loan collection process standards which are used by the bank to the standards practiced according to law. Organizations use quality assessment methods like collection process assessment to analyze the acceptable standards according to law. Using quality assessment standards helps organizations analyze processes.
If there are inconsistencies in the two processes, then they must be remedied through efficient implementation of best practices. Some of the problems are due to lack of software used in the loan collection processes. NBFCs do not have proper loan collection processes in place. The use of Artificial Intelligence and Machine Learning algorithms can help in the process of predictive analysis of the loan lending and payment processes. These processes will help in creating proper methods of credit risk evaluation. Apart from these, other means such as the use of payment plans which are backed by software will help in the analysis of proper loan collection. To identify issues in collection process assessment, there is a requirement of collection process analysis for an organization.
Collection Process Assessment for-
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