CREDIT MANAGEMENT EVALUATING YOUR EXTERNAL DEBT COLLECTION AGENCY PERFORMANCE
CREDIT MANAGEMENT EVALUATING YOUR EXTERNAL DEBT COLLECTION AGENCY PERFORMANCE
By Wasilwa Miriongi
Happy belated New year my readers , I would like to thank you for your support in 2016 and as we delve into this year ’ s agenda , I hope and pray we will be together for the rest of the journey as we engage in the field of credit management .
Now one of the tools you used in 2016 to manage your debtors was an external collection agency and you have come to a point that you need to evaluate their performance . I know whenever I have asked to provide debt collection services to any organization , the question I am asked is “ what is your success rate ”. This is meant to prick me to show my competence .
If as a credit manager or credit controller at some point you were responsible for selecting a new outside collection agency and started providing them with past due accounts for collection , now one of the directors in your company ’ s finance department wants to know how the agency is doing . He wants you to justify your selection .
What factors are you going to consider that will allow you to determine whether the Agency ’ s overall performance is meeting your expectations or they are falling short ? Consider the two factors – Objective and Subjective
‘‘ The major objective factor that can be easily measured in the collection industry is the recovery percentage . How much you have turned over verses how much the agency has collected . How is the Agency doing in collecting the accounts you have given them ? What can they tell you about how they are doing it ? You want complete transparency . ’’
In evaluating an Agency ’ s operation there are many factors that have to be considered . First you have to determine the period of time that you want to evaluate . Most Agencies would recommend that you use a minimum of 12 months of placements with the review being done 90 days after the last list was forwarded to them .
Some can be measured directly , like recovery rate and collection fees . Some cannot , like quality of the paper place due to factors such as age of debt and if it is disputed or not . Other factors like Agency personnel interaction with both you and your accounts come in handy . All are vitally important with respect to the Agency ’ s response to your needs and their results .
So , let ’ s take a look at both types of factors that we need information on , under the assumption that once the information is gathered and evaluated , you will be able to justify about how well the Agency is performing and how your decision to use them has benefited your company .
Objective Factors The major objective factor that can be
30 MAL 16 / 17 ISSUE