Aug
08
2011

Business collections prioritization: check out Experian’s second phase in a two phase approach.

In a previous post I advanced the first of a two phased cross matrix approach to prioritizing commercial collections.  In this second post in a two part series, I’d like to expand on this idea.

Phase 2 – Collection Priority Intelliscore and Activity Age Indicator

 

In a previous post, I advanced the first of a two-phased cross matrix approach to prioritizing commercial collections.  In this second post in a two-part series, I’d like to expand on this idea.

Phase 2 – Collection Priority Intelliscore (CPI) and Activity Age Indicator

The activity age indicator cross matrix approach is an industry best practice introduced into the commercial collection industry by Experian.  In many cases the CPI, used in conjunction with bureau based attributes, will add further lift in collection prioritization.  Even though a business might have a high likelihood of collectability, it may, in fact, be out of business—or near out of business.

Experian uses a combination of BizAggs (business aggregates), called the Activity Age Indicator to evaluate if a business is active or inactive.  This activity-based approach is an industry best practice surrogate to determine if a company is in business or out of business.

The matrix then charts the distribution of activity, which creates a four-quadrant approach to collection priority:

  • X-axis: CPI
  • Y-axis:  Updates or credit inquires from 0-3 months, all the way to no updates and 11 years

The quadrants:

1. Accounts with a high probability of collection and high activity (meaning a business is still “alive” and not out of business) would be where you would want to focus collection efforts.

2. Low collectability-high activity accounts. Yes the business is still active, but it would have a lower likelihood of collection. Perhaps these businesses should be worked second.

3.  High collectability- low activity accounts. The business might score high in collectability but are really “dead” businesses.

4.  Low activity – low collectability accounts. This is where you would not want to focus. These businesses are most likely out of business and have a low predicted collectability.

 


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