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What are the 5 metrics that matter for Debt Collections?

Published on March 6, 2024

In the world of debt collections, success hinges on efficiency and effectiveness. While chasing down overdue payments might seem straightforward, achieving optimal results requires a data-driven approach. Measuring the right metrics fosters transparency, collaboration, and ultimately, improved Collections performance.

This article delves into five key metrics that empower collections teams to collaborate effectively with lending and risk management partners. By harnessing the power of data, we can unlock a constructive environment for informed decision-making and superior collection outcomes.

5 important debt collection metrics

  1. Resolution rate – Percentage of borrowers who have successfully resolved their debt within a specific timeframe. This metric is used as a leading indicator to understand if we’re headed in the right direction. 
  2. Contactability – Determine the quality of the portfolio and inform your collections strategy based on what channel borrowers prefer and are contactable on.
  3. Customer experience – helps lenders measure the Customers’ Collection Experience and how likely they are to return, when they need another loan. 
  4. Projections aka DRR – Helps collection teams know if they’re on track and provides direction on when and for whom to switch collection strategies. This also tells us how well we know our borrowers and where the gaps in our strategy are.
  5. Profit per loan (PPL) – Measuring the average profit earned for every loan, helps understand the effectiveness of the collections strategy and the effort required to service a borrower.

Monitoring and analysing metrics consistently, gives collections teams valuable insights into what’s working and what isn’t,  fine-tune strategies and allocate resources effectively to  ultimately achieve the best results. 

We don’t claim these metrics to be the most important ones as we know there’s more to this than we’ve shared here – it depends on a variety of factors. 

The point is that having the right metrics in place will help ask the right questions and find a path to the answers we seek. Leveraging the right metrics will pave the way for a successful and sustainable collections system.