If you haven't ever been late on a payment, chances are you know someone who has been. More than 70 million Americans have some type of debt in collections.

Each year, financial institutions recoup some of these debts by selling defaulted accounts to debt buyers or outsourcing them to third-party collection agencies. However, these firms can and do use collection agents who barrage bank customers with phone calls at all hours with threats of lawsuits and prosecution.

Unsurprisingly, these one-size-fits-all bullying tactics aren't enticing customers in the era of the individual to pay their debt any faster. For example, the 60-plus-day delinquency rate among subprime car loans packaged into bonds over the past five years climbed to 5.16% in February, the highest level in nearly two decades.

Instead of paying, these tactics are inspiring consumers to complain. Debt collection generates more complaints to the Consumer Financial Protection Bureau – which is in the midst of its plans to reform the industry – than any other financial product or service. It's an issue so prevalent that John Oliver recently profiled it on his television show.

It's not good for banks. By automatically sending collection agencies on debtors, banks risk harming their relationships with customers who could be in good financial standing overall. Generally reliable customers may cease using the company because of a bad experience with a debt agency.

Rather than hounding debtors, financial institutions should examine each borrower's total relationship with the company. Today, a single delinquent account from a customer otherwise in good standing with a bank can be sold off to a third-party creditor who may subject the customer to the aforementioned harassment. Banks should look at the debtor, not just their single debt, in order to realize the debtor's true financial standing and determine if it's worth the risk to outsource the debt.

Aside from greater customer loyalty, there are also monetary benefits for financial services firms that look at the bigger picture than a single overdue account. Not being able to see the full scope of a debtor's relationship with a financial institution is estimated to cost financial services organizations anywhere from $5 million to $70 million in operational expenses, depending on the size of the company and its existing bad debt ratio.

The picture is clear: Not every late payment is worth chasing.

Senthil Kumar is vice president at Oracle Financial Services.