Delinquency is defined as a neglect of one’s financial obligations. These can be borrowing or payment for services that customers have used, but not yet paid for.

Debt collection is where a repayment of borrowing has not been made at the agreed time and the financial institution (as the creditor) is trying to get the customer to make that, and subsequent payments paid on time. If late or outstanding repayments are collected successfully, it may not result in the termination of their relationship with the customer. It will influence whether the bank is prepared to lend money to the customer in the future.

Debt recovery is where previous attempts at collection have failed and the financial institution attempts to recover the outstanding debt, including any outstanding payment, interest, and fees, effectively terminating the relationship with the customer.

Collections and Recoveries

The bank creates a framework that defines its approach towards collections and recovery of delinquent debts that includes its policy, how it uses its employees, its processes, the supporting technology, and how it uses analytics and the management information required to manage and optimise the collection of overdue repayments.