What is your collection strategy, and is it effective?

Most credit unions have a collection strategy. Fewer have stopped to ask whether it is still working.

In an environment of rising delinquencies, greater financial stress for members, and increased regulatory scrutiny, collections can no longer be viewed as a back-office function or a last resort. It is a direct extension of the member experience, and it affects loan performance, charge-offs, and long-term loyalty.

If your strategy has not changed in the past few years, there is a strong chance it is not producing the results or the outcomes you expect.

Many collection strategies focus on activities such as:

But high activity does not always lead to meaningful outcomes. In many cases, credit unions are doing more work but seeing slower recoveries and higher roll rates.

An effective strategy is not about how often you contact members. It is about how well your approach aligns with members' behavior and financial situations.

Traditional collection models rely on delinquency triggers at 30, 60, or 90 days past due.

The problem is that by the time a member reaches 30 days past due, the risk has often been increasing for months.

Early warning signs often appear in:

If your strategy only activates after delinquency begins, you are already behind.

Members fall behind for different reasons:

Yet many strategies still use the same scripts, call schedules, and payment expectations for everyone.

A strong approach recognizes that intent matters. Members who want to pay but are struggling need different support than disengaged members. Treating them the same reduces recovery and weakens trust.

Member communication preferences have changed, but many collection strategies have not.

Key questions to consider:

Members usually want convenience first and human support when something important or confusing comes up. Strategies that force everyone into one channel, or remove the option for real support, usually underperform.

Effective collection strategies measure more than dollars collected.

Stronger metrics include:

It is also important to understand why a strategy succeeds or fails. Without insight into member behavior and response patterns, improvement becomes guesswork.

Credit unions face high expectations for fairness, transparency, and respect. Members expect this even during difficult financial times.

An effective strategy balances:

When members feel respected, they are more likely to communicate, and engagement is the foundation of successful collections.

The most important question is not, “Do we have a collection strategy?”

It is, “Does our strategy reduce risk and strengthen member relationships?”

Credit unions that answer yes are usually the ones that:

In today’s environment, effectiveness is defined by outcomes, not effort.

Collections will never be easy conversations, but they do not have to be negative ones. A modern, effective strategy helps members manage financial stress while protecting the credit union’s balance sheet. When done well, collections build trust rather than break it, and that is where credit unions have a natural advantage.