In the world of credit management, often your receivables
team have many key performance indicators (KPIs) to choose from, whether they
are direct or indirect measurements of recovery on receivables. You can measure as simple or direct subjects,
such as gross revenue generated, or indirect behaviours such as call metrics. These measurements can be measured for manual
or predictive calling, for inbound or outbound calls handled.
The whole point of KPIs, in my opinion, are to measure and
refine your recovery process. Every
company and their A/R team should have their own unique measurements installed.
Some KPIs to Consider
There are a number of direct measurements that directly
evaluate recoveries, or prevention of losses.
Some suggestions to measure are:
Number of files worked each day -- you can measure this
per staff member, or for a team or predictive dialer as a whole. The point of this measurement is gross effort
-- without attempting to make calls, and reach consumers or businesses, you
cannot generate communication and create revenue flow.
Right party contacts generated -- from gross calls
made, the only effort that can meaningfully generate recoveries are right party
contacts (a call attempt that actually reaches a customer).
Conversion of right party contacts -- from your right
party contacts, conversion of these communications into revenue can be
measured, whether it is a direct payment created, or a grouping of a call
status (promise payment, refusals to pay, complaints generated, etc), this can
tell a lot about your team's effectiveness once the customer is reached.
Liquidation -- of course, ultimately the empirical
measurement of receivables are the recovery of those accounts. With varying balances owed, what matters is
liquidation, or the percentage of gross funds recovered. Whatever isn't recovered will become bad debt
write-offs or lost revenues.
In addition to these direct KPIs, there are several
measurements that are symptomatic of an effective team and efficient collection
process. In my opinion, too many credit
departments and collection agencies become too fixated on these metrics, so I
certainly advise caution when using these excessively.
Payment Evaluation - as a measurement of efficiency,
you can break down recoveries into patterns, such as payments in full versus
partial payments, or current versus post-dated payments, or by payment methods
such as immediate recoveries via telephone or website against delayed payments
such as cheques mailed in.
Call Times -- this is the one measurement I think
call centres and credit departments fixate on to the detriment of
efficiency. Calls need to be made, and
an ideal call should be brief and result in payment, but ultimately the primary
KPIs listed above I feel should take precedent over penalizing staff for calls
over three minutes, or how many washroom breaks a staff member takes. Efficient call behaviour should be encouraged
without taking away your staff's dignity and ability to work intelligently.
Escalated Calls -- whether this is measured as calls
escalated to a supervisor, a lost customer, or a complaint filed with the
better business bureau or Ministry of Consumer Affairs, these kind of missteps
harm your company's brand reputation, and cause extra work for others in your
company to diffuse the situation.
Someone on your team that is efficient in recoveries, but at the cost of
public backlash may not be an asset to your company, and measuring escalations
can reflect that.
Quality Control and Testing -- not every customer
will remit payment, but what is important are the methods used and the quality
of every call, regardless of the result.
If a member of your receivables team says and does absolutely everything
correctly, and still the customer does not pay, this should show positively on
that staff member's report. As well,
knowledge of company policies, collection laws, or privacy legislation should
be measured periodically to proactively ensure your staff are knowledgeable
about their role.
Intelligent
Measurement
Most companies measure KPIs, but few explain *why* they
measure certain KPIs, or hold on to certain metric measurements that have
become outdated or irrelevant. It does
not hurt to review your measurement reports with the staff, and allow your
dashboards or performance reviews to evolve with your company -- when you see a
lack of efficiency, measure it to reduce the shortfall, rather than allow your
measurements to dictate and stagnate your process.
As well, allow your team input to your measurements -- often
management (who are the authors of the performance reports) become distanced from the core recovery process, and their
reporting of their staff reflects that.
You can keep your measurements in tune with what the ultimate goals are
-- recovering funds, by seeking the input of your department.
Lastly, KPIs are a tool to improve performance, not
punitively control your staff. Find ways
to measure positive or exceptional behaviour by your staff. This could be a lack of absenteeism, positive
online Google+ reviews, feedback from customers, the amount of time a staff
member stays past their regular working hours to finish a call, special
projects or initiatives that your employees undertake above and beyond their
job description, behaviour that improves company morale or reflects positively
on the brand's image. These are all
important ways to engage with your staff and grow your company, rather than
allowing your receivables department to be a soulless call centre.
For further reading:
http://www.acainternational.org/news-key-performance-indicators-28190.aspx
Conclusion
As always, I'm interested in sharing measurement tools and
reports, and I'm happy to discuss what I have found works well. I can also recommend a number of software
platforms or services that can measure efficiencies. If you are a credit manager, fellow
collections colleague, or an ambitious receivables staff member, feel free to
reach out to me and start a discussion.
I can be reached directly at 226-946-1730.
Regards,
Kingston Data and Credit
Cambridge, Ontario
226-946-1730
bwettlaufer@kingstondc.com
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