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Solutions in Finance creates delinquency goal matrix
LOS GATOS, Calif. (6/11/10)--Credit unions should know that measuring delinquency roll rates is a powerful tool in determining collector performance and the results of collection department efforts, said Bill Garcia, president/CEO of Solutions in Finance Inc. Solutions in Finance, a Los Gatos, Calif.-based consulting firm that provides service for financial institutions in consumer lending, indirect lending, mortgage lending and collections operations, has created a delinquency roll rate goal matrix. (See chart).
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Measuring delinquency roll rates means measuring the beginning month delinquency numbers and dollars in the delinquency aging buckets against the month-end delinquency numbers and dollars in percentages. Aging buckets can include 10-30, 31-60, 61-90, 91-120, 121-150, 151-180 and 180-plus. The actual percentage may vary by credit union, region and the credit quality of the loan portfolio. The most common method for measuring collection results for credit unions is the percent of total loan balances over 60 days delinquent. Most credit unions do not measure individual collector performance. The credit unions that do measure collector performance usually measure only dollars collected by the collector and sometimes the percent promises kept, Solutions in Finance said. Some credit unions measure the number of collection calls collectors make daily. While these are good measurement tools, Garcia also recommends measuring roll rates at the department level and individual collector level. “Once you are able to capture the roll rate data, you can establish roll-rate goals for the collection manager and individual collectors,” he said. “We have clients that have established roll-rate goals and integrated them into their collector performance scorecards. This is very effective in improving collection results and your bottom line.”


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