In a previous post I advanced the idea of using a cross matrix approach to prioritizing commercial collections. In this first post in a two part series, I’d like to expand on this idea.
Phase 1 – Portfolio Scoring with Commercial Collection Priority Intelliscore
The Collection Priority Intelliscore (“CPI”) was built to predict the likelihood of a successful recovery of dollars placed in collection on a business within a year of the collection. It’s a score that we offer when scoring a portfolio. “Successful recovery” is defined as recovery of more than 50% of the amount placed for collection. The score ranges from 1 to 100. High score indicates a high likelihood of a successful recovery.
By example, if you were to rank order the business going into collection according to the CPI score, and worked the top 10% of the accounts, the projected percentage of dollars successfully collected, out of the total dollars placed for collection, is 31%. Similarly, working the top 20% of the accounts results in 51% of total dollars recovered.
If you were to use a generic risk score for this purpose, the projected results are as follows: Working the top 10% of the accounts results in 12.6% of total dollars recovered, and working the top 20% of the accounts results in a 20.7% of total dollars recovered.
Therefore, it makes sense to use a score created specifically for collection purposes. The CPI provides a significant lift to you in predicting the likelihood of a successful recovery of dollars placed in collection on a business over and above a standard risk model.
Look for Phase 2 of the collection prioritization on my post next week…