In this second post of the Life of Managing a Portfolio series, we’ll discuss Account Level Treatments using a mock portfolio of accounts to illustrate the process.
2. ACCOUNT LEVEL TREATMENTS
The previous post on Portfolio Evaluation discussed the importance of identifying the appropriate treatment for accounts that have not paid voluntarily. The first step in RDS’s proprietary rainfall model, Paymetrix AD, analyzes each account to determine its eligibility for Litigation or Non-Litigation treatments. Ineligible accounts (deceased or bankrupt consumers for example), will receive Other treatments.
A Profitability Index, as referenced in the first post here, is then assigned to all eligible accounts to determine the most appropriate and cost-effective treatment. Litigation is assigned to accounts with a high expectation of recovering the up-front costs. Those accounts with a low Profitability Index receive Non-Litigation treatments.
The projected returns on our mock portfolio reflect Paymetrix AD’s ROI according to the variable information within the portfolio provided by the client. However, what if a variable changes over time? What if the information initially provided was inaccurate? We must control for inevitable changes in the data to maintain the accuracy of our projections and make any necessary adjustments to Account Level Treatments.
The Paymetrix AI Solution
Paymetrix AI optimizes asset searching costs by leveraging our lengthy experience with data vendors. This experience has shown, time and again, that you get what you pay for. If a vendor is advertising asset hits for $1, there is a good chance that the data is either inaccurate or out of date. Paying for invalid data is wasting more than just $1; it’s wasting the time, effort and additional costs that were spent pursuing an invalid asset.
Just like the “suit-rate” strategies that some collectors use to make a best guess at which accounts should be litigated, shopping for asset hits by cost alone is a misguided strategy. Combining Paymetrix AD and Paymetrix AI, we maximize recovery and minimize waste throughout the account’s life.
Renewed Portfolio Projections
After applying the Paymetrix AI solution, Paymetrix AD determines the following:
- Non-Litigation 66% total estimated collections = $3.1M
- Litigation 28% total estimated collections = $8M
- Other 6% total estimated collections = $115K
Now that we have explained Account Level Treatments and determined a projected treatment for each account, it is time for Account Placements and Tracking. Stay tuned for Post 3!