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Does your collections process meet operational efficiency?

> Indicators to know how effective your collection management is being 

Measuring the collections process provides strategic information for improvement. 

How do you measure the efficiency of your collections process? The idea is to be able to have assertive indicators that can measure the success of the different stages of the Collections process, to know what needs to be adjusted, improved and what is working well.  

A company faces challenges in its collection process, with high delinquency rates and an internal management that does not achieve the expected results. Internal resources are overwhelmed and the efficiency of the process is low, which negatively affects the company's liquidity and its relationship with delinquent customers. 

Challenges: 

  • High Delinquency: A large number of customers do not comply with payment deadlines, which affects the company's financial health. 
  • Limited Internal Resources: The internal collections team does not have the resources or capacity to effectively manage the large number of outstanding accounts. 
  • Inefficient Processes: The lack of clear and efficient processes hinders the timely recovery of outstanding payments. 

Solution: The company decides to partner with a BPO service provider specializing in collections processes to improve its efficiency and results in this critical area. 

Implementation: 

  • Analysis and Design: The BPO provider performs a comprehensive analysis of the company's current collection process and designs a customized action plan to improve efficiency and debt recovery. 
  • Advanced Technology: Advanced technology, such as debt management systems and predictive dialers, is implemented to optimize collection management and prioritize the most urgent accounts. 
  • Specialized Resources: The BPO provider assigns a team of collection experts trained in negotiation techniques and difficult customer management to maximize debt recovery. 
  • Tracking and Reporting: Key performance metrics (KPIs) are established to monitor progress and detailed reports are provided on a regular basis to evaluate performance and make adjustments as needed. 

Results: 

  • Delinquency Reduction: Thanks to the implementation of more effective strategies and the dedicated approach of the BPO team, the company is able to reduce delinquency by 30% in the first three months. 
  • Increase in Debt Recovery: The improved efficiency of the collection process leads to a 25% increase in the recovery of outstanding debts during the same period. 
  • Improved Liquidity: With greater efficiency in collection management, the company experiences an increase in cash flow, which improves its liquidity and ability to meet its financial obligations. 
  • Customer Satisfaction: Despite the more rigorous approach to debt recovery, the company manages to maintain high levels of customer satisfaction thanks to the professionalism and empathy of the BPO team in their interactions with delinquent customers. 

Partnering with a BPO service provider specializing in collections provides the company with the resources, expertise and technology necessary to significantly improve its collections process. Positive results in terms of reduced delinquencies, increased debt recovery and improved liquidity demonstrate the added value of outsourcing this critical process. 

Today we want to show you which collection indicators you should be using in your company and what to do based on the results. 

#1 - Average Collection Period (APC) 

This indicator is determined by the relationship between the number of days that elapse between the date of invoice issuance and the date on which the customer actually pays. An effective collections process has a PPC lower than the actual time given to customers. That is, when the customer settles the invoice even before the time granted is over, so it never officially enters into arrears.  

The measurement of this indicator is extremely useful when there is a portfolio of recurring customers, since if most of the customers are new, the indicator will not be calculable.  

#2 Average Debt Aging 

This indicator provides information on how it is calculated by averaging the days elapsed since the invoice was issued based on the overall time it takes customers to pay. That is, if the average of all your customers to pay is 5 days, if a customer takes 6 days to pay, he will already be exceeding the overall average. 

This information allows you to establish a customer profile and set a standard for the different types of arrears. By knowing this, you will be able to design a differentiated strategy for each type of customer and delinquency. 

#3 Percentage of overdue debt 

The overdue debt percentage KPI provides information about the amount of overdue debts as a function of the total of your customers. Having this data helps to understand the margin for improvement in Collections. If the percentage is less than 3, it is considered small, so improving it may require more significant efforts. On the contrary, if the percentage is 10 or more, the best improvements can be made with less effort.  

#4 Percentage of clients managed 

The indicators listed so far indicate how successful or not the company's collection process is being, but do not generate information about the effort the company is making to collect in a timely manner. In order for the indicator to be measured more accurately, it is advisable to perform the measurement among customers with overdue debts that were managed 30 days ago or less. 

In most cases, it is recommended that this indicator is above 75%. In addition, you can calculate the percentage of the amount of overdue debt among clients managed 30 days ago or less in order to prioritize those debts of greater volume and focus the strategy not only on the number of clients but also on the amount of debt in general.  

The relevance of an indicator is not only in its value but also in the evaluation we make of it according to our strategy and the time we are measuring. These indicators are also more useful when they can be shared with other areas that fall under the Collections area in order to have a more general vision and be able to make more strategic and beneficial decisions for the business. 


At SkyTel we offer you the best collections process for your clients. If you want to know more about this and our other services, leave us your details here to coordinate an assessment with our specialists. 

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