Debt collection sucks for all parties involved: For debtors, receiving hassling phone calls and letters in the mail can be demoralizing, especially if they feel they are unable to pay. For debt collectors, letters and calls can go ignored, reducing their ability to get repaid.
To solve both those problems, a startup called Collectly is moving the process online and providing more transparency around how debt collection is going. By doing so, the company is recovering debt at twice the rate of traditional collection agencies.
Collectly was founded by Levon Brutyan, who was managing director of a collections agency in Europe before setting out to reshape the industry with technology. He teamed up with machine learning expert Max Mizotin, who built the platform.
According to Brutyan, the way debt collection works today is that agencies send letters to debtors who owe money. If they don’t hear back, they send another letter. And if that doesn’t work, agents start making calls to debtors. If none of that works, they wait a few weeks and start the cycle all over again.
The longer a bill remains in arrears, the less likely it will be repaid. Collectly attempts to shorten those cycles by tracking and learning about a debtor through each interaction. The platform integrates with most major accounting software, allowing users to select which accounts it should follow up on.
Collectly identifies the best way to contact debtors and tracks when they open and respond emails, providing more transparency to those who are seeking repayment. With a personalized communication strategy for each person they reach out to, Collectly also can provide debtors with appropriately structured repayment solutions if they can’t pay the whole amount owed.
Also, by better identifying which debts are most likely to be repaid, Collectly can focus on higher-value targets. But even in those cases where money isn’t likely to be recovered, the platform provides a much faster and easier process for its clients than traditional collection agencies.
To start, Collectly is focused on debt collection in the medical industry, and has a success rate of 56 percent with early customers. But the company believes its system can scale to other verticals in the future.