Cortera Blog » Batch

Collecting in Tough Times – Cortera’s Collections Priority Rating – CPR Can Help

Alex Coté — Mon, 26 Jan 2009 21:16:22 +0000

Commercial Credit & Collections Professionals (within corporations and at 3rd party collections agencies) face one of the most challenging collections environments in a generation. With the economy in a recession and with many banks unable or unwilling to provide debt financing, companies are being forced to rely more and more on their vendors to finance their working capital. As a result, both collections departments and agencies are facing rapidly increasing volumes of delinquent accounts. Lurking inside those increasingly delinquent portfolios are tomorrow’s dead beats and bankrupt companies. However many of those accounts are just temporarily slowing their payments in an effort to get back on their feet. How is a collections or credit professional to tell the difference? How can a collections department maximize performance against key objectives such as Days Sales Outstanding (DSO) in such a challenging environment?

With this tough environment in mind, we are pleased to announce the launch of Cortera’s Collections Priority Rating – CPR℠ to help you prioritize your collections efforts. These days it is essential for businesses to focus their collections activities on their increasing challenging customer portfolios. Cortera Collections Priority Rating – CPR is designed to assist collections departments do just that.

Cortera CPR assists collections departments of all sizes in evaluating customer portfolios for signs of delinquency, highlights changes in payment behavior and provides indications of internal and external events that could impact future payment behavior. Cortera CPR also provides a unique segmentation feature that groups accounts based on overall payment risk. This can assist customers in prioritizing, assigning and ultimately the treatment of past due accounts.

Like all Cortera products, Cortera CPR is offered in a variety of flexible delivery methods:

Online via our DIG web portal in report form for individual company analysis at $2.00 (discounts are available for data contributors)
Batch via our BOOST product for rapid analysis and segmentation of all or part of your customer portfolio at $0.60 per account scored (discounts are available for data contributors)
Web Service via our CONNECT XML for access to all Cortera CPR data elements and easy integration to your existing accounting and collections software.

If you are interested in learning more please call 877-LOWR-DSO (877-569-7376) or complete a short form for a free trial.

Why don’t more credit & collections professionals do batch portfolio scoring? (Part II)

Cortera — Mon, 23 Jun 2008 19:05:35 +0000

In my last post I wrote about some hypotheses around why more credit & collections professionals don’t do more batch portfolio scoring.

Here are some thoughts that address each of the barriers in order.

Common Perception	New Reality
Tradition – “I don’t trust credit scores. A credit professional should conduct a more thorough review of trade experience, public records, references etc. in order to truly analyze a company.”	In a world of “do more with less,” it’s all about the 80/20 rule. If you learn to trust credit scores on the long tail of your accounts (e.g. individual customers that make up a small percent of your A/R) you will have more time to do the necessary analysis on the larger exposures. The result will be a happier credit manager and a happier CFO.
Hassle – “It’s a hassle. First I have to fight with IT to get the resources to pull the file. Then I have to deal with my sales rep who will then submit the file to corporate for processing. After a week or two I get a file back. It’s just not worth the effort.”	The fact is that technology has continued to evolve it’s easier than ever to get data out of source systems. If your IT person tries to tell you otherwise, it’s more likely that they are trying to avoid a bit of work than anything else. Also, if you are contributing your trade tape to one of the bureaus, you have a starting point for portfolio scoring right there. Separately, new batch portfolio tools like BOOST put you in charge. You upload the file, you get the file back, you decide how and when to download and analyze the results.
Overwhelmed – “I don’t know what to do with the data when I get it back. If I get scores back on 5,000 accounts, where do I start and how do I make sense of it?”	The easiest thing is to dump the file into a spreadsheet and sort it by credit score. If you have added corporate linkage to your file you can sort on LINK ID and then sort by score. And just as its easier to get data out of source systems, it is also much easier to get data back into source systems for further analysis and/or credit limit setting and order blocking.
Budget – “Where do I get the budget for it? It’s a large one-time fee that could potentially consume my entire budget for the year.”	It might be a bit counter-intuitive but batch scoring could actually give you more data for less money. The following example helps to illustrate the point:Company X has 10,000 customers and typically pulls 1,000 credit reports per year on the largest customers at an average cost of $10.00 per report. For the 9,000 smaller customers, the credit department may do a bank reference or a trade reference, but probably not.What if Company X spent that $10,000 budget in the following way: Batch score the entire portfolio once per year for $0.50 per record: $5,000; Batch score the largest 1,000 customers quarterly for $0.50 per record: $2,000; Pull credit reports (and do other analysis) on the largest 600 customers for $5.00 per report: $3,000. It’s the same $10,000 budget but every account has been touched at least once, the largest accounts have been analyzed quarterly using a consistent score and there is still time and money left over to do detailed reviews on the very largest customers as and when needed.
Freshness – “Batch scoring is a good way to get a view of the portfolio at a point in time, but what about the other 11 months of the year? I’d rather pull a credit report as and when I need it so I get the most recent data.”	See the example above. Using the right tools, you could end up with more data on your key accounts than you’ve ever had before. You may even have budget left over to batch score smaller portfolios on an ad hoc basis throughout the year.

As ever, let us know what you think.

Why don’t more credit & collections professionals do batch portfolio scoring? (Part I)

Cortera — Tue, 17 Jun 2008 15:43:27 +0000

This month when we introduced our new BOOST tool we got some interesting reactions.

This post isn’t a commercial for BOOST, but some background is relevant: BOOST is a self-service batch processing tool that enables the credit & collections professional to upload their portfolio of customers or potential customers, add credit scores to each record and even add corporate linkage. The data comes back in minutes, not weeks.

The reactions? Many of our customers instantly “got it” and rushed to test the new BOOST functionality. However, some of our (typically smaller) customers didn’t quite know what to make of it. They had never done batch scoring before and some didn’t even know what it was.

It made me wonder why more credit & collections professionals don’t do batch scoring. Whether it’s through BOOST or services from other data bureaus, portfolio scoring can offer compelling benefits to the credit professional. In a world where regulators and CFO’s are pushing to have every exposure analyzed at least once per year, batch scoring is a way to meet the requirement while saving the time it takes to physically look at every account. Pricing is very attractive on a per-record basis, often significantly lower than purchasing a full credit report. The big consumer creditors like banks and mortgage companies have recognized this value and done portfolio scoring for years.

So why don’t more commercial credit professionals take advantage of it? My sense is that the reasons are more to do with conditioning and habits than anything else. From watching the industry and listening to some of our customers, here’s my list in order of what I’ve heard most often:

1) Tradition – “I don’t trust credit scores. A credit professional should conduct a more thorough review of trade experience, public records, references etc. in order to truly analyze a company.”

2) Hassle – “It’s a hassle. First I have to fight with IT to get the resources to pull the file. Then I have to deal with my sales rep who will then submit the file to corporate for processing. After a week or two I get a file back. It’s just not worth the effort.”

3) Overwhelmed – “I don’t know what to do with the data when I get it back. If I get scores back on 5,000 accounts, where do I start and how do I make sense of it?”

4) Budget – “Where do I get the budget for it? It’s a large one-time fee that could potentially consume my entire budget for the year.”

5) Freshness – “Batch scoring is a good way to get a view of the portfolio at a point in time, but what about the other 11 months of the year? I’d rather pull a credit report as and when I need it so I get the most recent data.”

Next time I’m going to address some of these barriers to adoption. In the mean time, tell us what you think.