Collections and Recovery Scorecards

When accepting a new customer’s application for credit, or agreeing to extend credit for existing customers, assessments should be made to indicate the likelihood that the customer will be able to manage financially and will be able to comfortably repay the amount borrowed.

In addition, it is important to recognise that customer circumstances may change over time and lenders will need to understand them on an on-going basis in order to offer appropriate support throughout the relationship.

In today’s climate, the prioritisation of accounts in collections plays an integral part in controlling bad debt, knowing who to prioritise and in treating customers fairly.  For example, how frequently and through which channel to contact them can be difficult balance to strike.

Getting it wrong can potentially cause a negative experience for the customer, and for your recoveries.

Collections scorecards can support this process.  For example, using scoring within collections may help to identify those customers who require less interaction, or contact, to prompt a payment.

This can allow you to focus on the individuals who may need further contact or support to bring their account up-to-date. The ability to make this distinction is essential, as companies often face the further challenge of balancing limited resources in this area as well as making sure that customers are treated fairly.

Models can be developed to predict a customer’s propensity to pay. They can also identify the likelihood that customers may experience further financial difficulties in the future.

Incorporating a collections scorecard into an existing strategy can have several benefits for you, including:

• Improved collection and recovery rates due to being able to identify the right channel and right contact plan for each individual customer
• A more efficient collections operation
• The ability to offer a better customer experience and service throughout the collections journey

We use our extensive experience of the credit industry to help with the development of collections scorecards.

This could include support and advice in creating an appropriate sample for development, as well as building the required models. Additionally, our knowledge of enhanced strategy modelling can be utilised to help get the most from scorecards and ensure that the score is utilised in such a way it benefits your comprehensive collections strategy.