Monitoring Your Collection Rates And Finding Balance

JSP Credit Management's journey so far has taken some unexpected turns in its short lifespan. We do not mind admitting, when we were developing our first business plan and we got to the question about who our target market was, we recall vividly thinking and without a shadow of a doubt, that the best approach to take would be to focus on our most immediate local market. It was after all a market that did not include any direct competitors in it. That seemed sensible.

In this respect we got off to a solid start. Leaning on some old relationships our very first client was based in the same town that we are in. We were following our business plan to the letter you could say. Until about a month later that is, when an opportunity arose on social media to get involved in a disputed commercial debt that existed between two parties that were based in Europe and Asia respectively. Things changed quite rapidly, and this, we have to confess, was not a part of the business plan.

Don't worry, this is not a "don’t listen to your business plan" blog. We are big advocates of having a business plan. But we also believe in making room for some flexibility in your business model as being too rigid does not seem intuitively to be the best way to approach a market that changes as rapidly as ours. Therefore we have chosen to embrace the opportunities that have been presented to us and yes, it has involved some risk, but it has also involved some reward too and that is what we have benefited from in hindsight.

What happened after that is it appeared to whet our appetite for avenues that we could explore to facilitate our ambitions for growth. This brought us to considering tendering for commercial debt collection contracts for public sector organisations and other larger private organisations. Although our staff had worked for organisations that tendered for work before, we must admit it was not something that we had ever had a direct involvement in, so we were very much entering in to new territory.

What we have observed so far in our experience of tendering for commercial debt collection contracts is that one question tends to pop up over and over again. Well, many of them do in fact, but were focusing on one particular question for the purpose of this blog. That is "what was your recovery rate?", when referencing a previous client we had worked with. So we know that the percentage of debts that we collect on behalf of our clients is one way that outside stakeholders might measure our success as a service provider.

We cannot say that it came as a surprise to be asked such a question. We ourselves like to analyse our own recovery rates, and our collectors have adopted a similar approach throughout their careers. Having an objective number to look at sometimes trumps a subjective feeling you may have about your own performance which can be subject to all kinds of unconscious bias. We have also seen this topic brought up on social media in the past and it was engaged with enthusiastically. We have also seen it covered in academic literature too, where it has been suggested anywhere between 10%-30 can be achieved at DCA stage.

Our own is a little higher than that but we like to think we are a business whose approach is always in a state of evolution. Therefore as we tinker with our methods we hope that it will result in higher collection rates, probably more like year on year rather than month on month as the debt collection industry is somewhat unpredictable. These changes could be to our communication methods, the content we use, the type of cases we work on, our approach to talent management in-house and access to other resources which may otherwise affect the number.

But we are not actually looking for significant upward changes to our number. We would much rather opt for a incremental amount of progress in this area as we foresee our own collection rates as something that reflects our own practice, and there are some areas of our own practice which we are not prepared to compromise on regardless of the potential benefits it could have on our collection rates and therefore how it might potentially strengthen our bid on a commercial debt collection contract.

That means that as a business we strive to behave ethically and honestly in all that we do, and if we fail in that regard then we have abandoned our identity as a company. We have core values as a business that underpin our work and it is by those core values that we have got to where we are today. We heard of a situation recently where a creditor was pressuring a debtor to take out a loan to pay them back. We challenged them on that because it does not align with our values as a business. So yes, we believe that our recovery rate does offer one way of measuring our success as a business but it is far from the only one and above all any ambitions in relation to it should be tempered with a balanced mindset.

We are here to do a bit to businesses safeguard their cash flow against late payers or debtors that are refusing to pay, so if you have been struggling to get an invoice paid and would appreciate the support of a team who pride themselves on operating in a way that is mindful of the above then visit our website at and contact us to discuss your needs. We operate on a no-win-no-fee basis for bad debt recovery and our credit control and credit risk services can be ordered via our website with the littlest of hassle.

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