Collections Expense per Collections Employee

Collections Expense per Collections Employee

KPI Details

Collections Expense per Collections Employee measures the total expense incurred by the Collections function in relation to the average number of employees working in Collections (includes administrative and support employees as well as collections agents and managers) over the same period of time. Relatively high values for this metric can be indicative of highly manual collection processes (i.e., manual delivery of late payment notifications, etc.), inefficient call scripts and call handling policies, an increase in payment disputes (can be due to product or service errors, customer dissatisfaction or undelivered products or services), and sub-par collections employee training and performance. Each of these factors can, furthermore, lead to increased error rates, longer cycle times and higher charge-off rates which can increase labor costs to unmanageable amounts.

KPI Definition

The total expense incurred by the Collections function divided by the average number of employees working in Collections (includes administrative and support employees as well as collections agents and managers) over the same period of time. Total operating expense includes labor (wages, salaries, commissions, benefits), overhead (occupancy, utilities supplies, advertising, legal fees, travel costs, etc.) and technology costs.

KPI Best Practices

• Hire part-time employees when possible to minimize benefits costs
• Perform regular account audits to minimize calls to invalid numbers and letters to old addresses
• Use activity-based costing (ABC) to identify the highest cost drivers of the function

KPI Calculation Instructions Collections Expense per Collections Employee?

Two numbers are used to calculate this KPI: (1) the total expense incurred by the Collections function, and (2) the average number of employees working in Collections over the same period of time. Include administrative and support employees as well as collections agents and managers in the denominator. Total operating expense includes labor (wages, salaries, commissions, benefits), overhead (occupancy, utilities, supplies, advertising, legal fees, travel costs, etc.) and technology (hardware, software, end-user operations, etc.) costs.

KPI Formula :

Total Collections Expense Incurred / Number of Collections Employees