Magazine article Business Credit

Outsourcing Receivables in SE Asia

Magazine article Business Credit

Outsourcing Receivables in SE Asia

Article excerpt

International Affairs Section

Supervisor calls can be challenging, and sometimes they can even be fun, but any chance of having fun on this call disappeared soon after I said, "Hello."

"Are you the Collections Manager?" replied an old man's voice.


"Good." Then he took a breath. "Mr. Steve, why did you send two Indian guys to my house at 11:00pm last night? They threatened to 'pukul kepala saya' (break my head) unless we paid your bill?"

The old man's daughter-our customer-- received a "site visit" from one of our external collection agencies. Unfortunately, the site visit took place so late at night, and in such an unprofessional manner, that it scared our customer's father into filing a police report. We also lost the daughter as our customer.

My collections perspective is Malaysia-- centric, but I am fairly certain that the collections environment here is similar to other developing SE Asian countries. This article focuses on my experiences working with Malaysian collection agents. I will also share the criteria I use to choose new agents and to measure the effectiveness of our existing ones. I hope this article helps you in selecting and managing SE Asian collection agents. Perhaps it may even help you in your dealings with your local agents.

Background: One Company's Outsource Process

From day 75 to 90 (from bill date), we refer a portfolio of overdue accounts-- of equal value-to our seven collection agencies. We pass the portfolios to our agents via a diskette with an Excel file on it. From the diskette, the agents manually create file cards for each account. They are assigned the accounts for 60 days. The agents pay special attention to accounts over $250, as they are considered high balance: such accounts receive both phone calls and site visits.

In Malaysia-or Asia for that matter-- "malu" (embarrassment) is a powerful tool for collecting money. If the agents can locate the debtor, they can usually get some kind of payment by using this tool. Site visits are especially effective as they cause the most "malu." The agents generally use women for the telephone work, but only men make the site visits.

Just as "malu" is an important tool to receive payment, it is equally important to maintain the debtor's dignity, or "face."

The two go hand-in-hand. Of course, this is a rule in any country, but it is especially so in SE Asia.

If the debtor for a high balance account is unreachable, the agents have their own "private" sources within the various governmental institutions: tax and social security departments. They will call their contacts (for a fee) to attain more recent contact information on the debtor. Back in the U.S., such actions may be forbidden, but here there are no skip tracing databases, no credit bureaus-even the phone books are inaccurate and in short supply.

Although there is nothing similar to the FDCA in Malaysia, our firm has set certain rules that agents must abide by if they want to do business with us. One of these rules is: no calls or site visits past 8:30pm, Monday through Saturday-yes, Saturday. Working in the developing world is different than in North America or Europe. Here, Saturdays are considered a normal working day.

Our agents are allowed to contact our customers up to 8:30pm, but they advise me that other clients allow them to call much later. The reason being, many customers don't return home from work due to the traffic jams until after 9:00pm. In addition, Malaysians can be difficult to reach at home, as they rarely use voicemail or answering machines. I speak from first-hand experience: my answering machine is two years old and has so far logged only one message.

Now that you understand a bit of the local collections scene, let's look at the criteria used to select and manage the agents.

SE Asian Agents' Selection Criteria


Do the agents "attack" the accounts soon after receiving them? …

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