Al Brothers says the keys to helping those who are unable to fulfill their financial obligations are a strong training program and even stronger technology.

According to Al Brothers, CEO of Cavalry Portfolio Services, the vast majority of Americans manage their finances responsibly, paying their bills in full and on time. Banks focus their energy on these paying customers and therefore sell large portfolios of non-performing accounts to financial services companies such as Cavalry. Cavalry specializes in the collection of non-performing accounts and helps those who—usually for reasons out of their control, including job loss or illness—are unable to fulfill their financial obligations.

Cavalry’s account resolution specialists work with debtors to renegotiate the terms of their loans to make repayment easier. “Let’s say someone owes $5,000 on a car loan. We might set up a long-term arrangement where they pay us $100 a month, or we may allow the individual to pay off the loan at a discount,” said Brothers.

Cavalry also helps debtors identify alternative sources of funds. For instance, an account resolution specialist may help a customer think through the possibility of dipping into a 401(k) or refinancing property.

Al Brothers

After two-weeks of classroom training, employees spend a month or more in a transitional training unit where they begin working on accounts under close supervision. An experienced employee or manager is always close by to answer questions or assist in problem resolution. Brothers has found that the continuation of classroom training in a supervised environment has a significant impact on employee retention, performance, and productivity.

The CEO explained that recording 100% of conversations between account resolution specialists and debtors is also key to effective training. Management listens to select conversations together with employees, picking up on subtleties, such as tone of voice, as well as whether or not the employee took all the necessary steps to help the customer appropriately. “It is eye opening for our employees to hear themselves on the phone, and it gives them a better understanding of what they should do the next time around,” he said.

Cavalry also records conversations to keep employees focused on having positive interactions. “By recording the calls, our employees know that everything they say is going to be heard and reviewed. We don’t tolerate behavior that is not consistent with the company’s values and standards,” Brothers said. To keep the company performing at its best, Cavalry offers account resolution specialists retention bonuses and competitive salaries and benefits. But more importantly, employees are motivated by ample opportunities for advancement created by the company’s rapid growth since it was founded in 1991.

At the management level, Cavalry offers year-end bonuses that are tied to the company’s performance. Bonuses can total as much as 50% to 100% of a manager’s base salary, providing he or she performs well. According to Brothers, the bonus program aligns the interests of the employees with the interests of the company, which he believes to be critical to a successful business.

Tech savvy
With roughly 12 million accounts, Cavalry requires sophisticated data management software and highly skilled analysts and programmers. In addition, Cavalry has a group in the Hawthorne, New York office (the firm also has offices in Tulsa, Okla.; Phoenix, Ariz.; and St. Paul, Minn.) dedicated to turning paperwork associated with each account into easy-to-access electronic files. “Say we are trying to collect on a cell phone account. The debtor may not remember how much he or she owes. With a few clicks, our staff can pull up the last statement,” said Brothers.

“We have invested a significant amount of time and money into developing a system that allows us to electronically access the supporting documentation for each account. Some large financial institutions haven’t gone as far as we have.”

Brothers explained that for each portfolio Cavalry purchases, a substantial portion of the accounts will never be paid, but credit scoring and account prioritization technology allows the company to identify and focus its efforts on the accounts that will most likely come to fruition. “Our data analytics group studies credit bureau data to determine where we should be spending our time and energy,” said Brothers. “We were one of the first companies to develop a sophisticated credit scoring and account prioritization methodology, and it has played a very important role over the years.” Cavalry also leverages its credit scoring and account prioritization technology to determine how much it should pay for each portfolio. For example, if a bank posts a portfolio consisting of 100,000 credit card accounts for sale, four or five firms may bid on it. If a firm bids too low, it risks losing the portfolio to another, but if it bids too high, it may never collect enough funds to cover the cost.

Looking to the future
As Cavalry is one of the largest companies in a rather small industry, Brothers expects that it will be challenging to continue to grow at the same pace. “We’ve simply reached the point where expanding at the rate we have been over the past several years will be difficult,” he said. To avoid a potential plateau, Cavalry is exploring the possibility of expanding into other service areas and developing complementary businesses.

Although Cavalry isn’t certain what the future holds, Brothers is sure the company will stick to its roots. “We will definitely stay in financial services, we have experience with the mortgage industry, auto financing, and commercial lending and leasing and other types of specialty finance. We see plenty of opportunities ahead.”