Receivable/Accounts - Information for Credit and Collection Issues

Friday, April 11, 2014

Time Is Money

In the business of third party collections, time is our finite resource.  If we had 60 days a month, or staff that worked 16 hours a day, we could conquer the world and satisfy even the most demanding client.  However, collection agents have this odd desire to go home, spend time with their families, and sleep now and then.

When an agency needs to set up a call schedule, they often get obsessed with results and lose track of the law of diminishing returns on their staff.  If you want your collection agents to come to work and stay until 7pm each night, you will only retain employees that are desperate for work, or have low standards for their employer.

On the other hand, if you want to hire and retain the best staff, you want to set out a schedule that works for your valued employees, but still covers the call times necessary.  The work-life balance is a tricky thing in our business.

Where Is The Money?

Really, in our business it’s about collecting 80% of your revenue in 20% of your time – the goal is to maximize the vast amount of human effort that goes into collections.  It boils down to right party contacts and conversion of those right party contacts to collections. 

Outbound calls can be controlled by the agency, but inbound is not something that can be controlled – consumers will call in whenever it is convenient for them.  And at different times of the day, the consumers (statistically) will be more disposed towards payment vs. disputing the account.  I’ve worked at agencies with mandatory Saturdays, and I’ll tell you from personal experience, it’s got a much lower conversion to collection rate at 9:00 am on a Saturday morning versus 4:30 pm on a Monday.

Building A Schedule

When I worked at a call centre that did consumer collections across the US, the phones would ring until 11:00 at night from the west coast, but having the staff stay that late was simply not going to work.  However, we did build a reasonable schedule – we broke the collection team into four groups, and each group alternated coming in one day a week at 12:00 am until 9:00 pm.  The staff were not horribly inconvenienced, and we were able to offer 9:00 am to 9:00 pm Monday to Thursday.  For the type of business we were servicing, it made sense.

There was a science to the scheduling too – we could literally map out when calls were received and payments were taken, and then break it down to a science of what the average staff member generated in revenue, per person and per hour.  The larger competing agency down the street kept their staff at the office until 1:00 in the morning, and we cut off the call times when it became cost prohibitive to keep the staff in the office. 

As a side benefit, by building a reasonable schedule, guess where the best and brightest from the competition came looking for work when we advertised positions?

The Shocking Idea Of Being Flexible

In an office with a predictive dialer, you need to have regimented schedules, in order to work in synchronicity with the machine.  However, I’ve never been a fan of predictive dialing, and prefer to run a manually assigned system of collections – it’s far more effective and liquidates a higher amount for the creditor. 

Now, in third party collections, it’s common to have a late night to try to reach those people not home between 9:00 and 5:00 local time, and field calls from the western time zones.  The question is – how late do you work, and how you do you work it out with the staff?

Here’s a novel concept – give the staff control over their schedule.  By all means, plan a late night to 6:00, 7:00 or even 9:00 if the business warrants it, but let the collectors choose which night to work, and let them change it from week to week, if necessary.  You can even balance it out with an early day where they can leave at 3:00 pm or even noon once a week.

Now most of the collection managers are pulling away from me at this point, thinking my suggestion is utterly crazy.  “We can’t run an agency like that!  We’ll miss all the payments!  Managing the staff will become difficult!  People will take advantage of a flexible schedule!”.

For those doubters, go look at your HR records, specifically absenteeism.

Missed Opportunities

If you recall, we started this article with the idea that time is money.  A collection agent earns a daily wage, based on an hourly rate or monthly salary – that amount might be anywhere between $80 and $300 a day.  Typically, they will make a commission amount in addition to this, but let’s just stick with the base cost.   Of course, they are expected to generate double, triple, or quadruple their salary in revenue so the collection agency can be profitable.

If a collection agent calls in sick, the company deducts $80 to $300 a day from their salary, but loses $160 to $12000 revenue from lost manpower.  It’s a losing situation for the agency, it’s a losing situation for the creditor (because their liquidation will suffer), and it’s a losing situation for the staff.  So obviously, you want to combat absenteeism, because it hurts everyone.

If you establish a flexible schedule, absenteeism will be cut dramatically – employees are happier to come to work, can set personal appointments around their schedule, and won’t burn out.  You will retain skilled staff and earn loyalty, which reduces staff turnover (which is another cost or setback to the agency and their clientele).

You will have half the office clear out on a Friday afternoon, but how much money did you lose from scheduling, versus how much money would you lose from absenteeism and staff turnover if you made those same people work until 7:00 pm on a Friday?


The 1950’s-style of managing staff by watching the clock, punching a card, and running a boiler-room call centre is dying.  Milennials and progressive staff expect a flexible work-life schedule and companies that balance it with the ultimate goal of meeting revenue criteria and exceeding client expectations will win, not the companies with a heavy absenteeism policy or split shifts until midnight to squeeze an extra dime out here and there.

I’m speaking here from my personal experiences – over the years I’ve seen great companies and poor companies’ scheduling attempts.  I’m interested to hear what experiences other folks have had in our industry, and how they deal with scheduling and absenteeism.  Thoughts?

Thanks kindly,

Blair DeMarco-Wettlaufer
Kingston Data and Credit
Cambridge, Ontario

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