Expense per New Collections Account

Expense per New Collections Account

KPI Details

Expense per New Collections Account measures the total expense incurred by the Collections function in relation to the number of new accounts in Collections over the same period of time. A relatively high value for this metric can be related to a number of factors, including 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.

KPI Definition

The total expense incurred by the Collections function divided by the number of new accounts in Collections 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 Calculation Instructions Expense per New Collections Account?

Two variables are used to calculate this KPI: (1) the total expense incurred by the Collections function, and (2) the number of new accounts in Collections over the same period of time. The expenses typically incurred by the Collections function focus on labor (wages, salaries, benefits, etc.), overhead (occupancy, utilities, supplies, etc.) and technology costs. Only include accounts in the early stages of collections (i.e., accounts that are 30-90 days past due) in the denominator of this calculation.

KPI Formula :

Total Collections Expense Incurred / Number of New Accounts