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Measuring What Matters: Why KPIs are vital for effective collections

KPIs offer so much more than just numbers to report on. They provide valuable insights into the collections process and uncover opportunities for improvement. By closely monitoring these critical metrics, collections agencies can measure their financial goals, optimize their processes, boost productivity, and make informed decisions that drive business success and strengthen customer relationships.

May 1, 2024 5 minutes
Showing kpi's in debt collection at an tablet and phone

Why KPIs matter in receivables management 

KPIs are more than just numbers in a report. They offer meaningful insights into receivables management and highlight opportunities for improvement. Collections companies can use them to measure financial goals, streamline processes, and boost productivity. 

By monitoring these indicators closely, organisations can make informed decisions that support business success and strengthen customer relationships. KPIs also help maintain a thoughtful and effective connection with consumers, which can lead to higher recovery rates and stronger customer loyalty. 

Relevant KPIs for Collections 

In today's collections landscape, it's not just about what is measured, but how quickly and decisively action is taken. The collections industry is projected to reach over €5.5 billion in revenue by 2025. At the same time, margins are under pressure from regulatory oversight, inflationary payment delays, and consumers demanding digital service even when behind on payments. 

To help collections agencies enhance their operations, let's explore some of the key performance indicators to track. 

 

1. Success Rate: How much are you recovering?

The success rate is the most critical metric for measuring the effectiveness of a collections process. There are two primary KPIs to consider:

  • Recovery Rate: The percentage of the total amount placed for collections that is actually recovered.
  • Realization Rate within X Days (e.g. 30/60/90): Provides insights into consumer willingness to pay and the impact of early actions.

The Recovery Rate tells you how much of the placed debt was successfully collected. Expressed as a percentage, this KPI is especially helpful for:

  • Comparing in-house teams vs. external collections partners
  • Evaluating return potential on non-performing loan (NPL) transactions
  • Benchmarking different debt portfolios (by age, region, risk class)

The Recovery Rate is a lagging indicator, reflecting performance over a longer period. This makes it well-suited for strategic analysis and year-over-year or quarterly comparisons, rather than short-term operational adjustments.

The Realization Rate within X Days (e.g. 30, 60 or 90 days) complements the traditional Recovery Rate by adding a time dimension. It shows how much of the outstanding debt was collected within a defined timeframe. This can reveal the impact of communication strategies, payment incentives, or system changes. Teams can also use this metric to proactively address delays (e.g. late initial contact, improper communication channel).

By closely monitoring these key performance indicators, collections agencies can make data-driven decisions, optimize their processes, and build stronger, more understanding relationships with consumers — all while driving financial success. At Riverty, we're here to support you on that journey, providing the expertise and tools to help your business thrive.

 

2. Turnaround Time: How quickly are invoices processed?

The speed at which outstanding invoices are resolved directly impacts your liquidity and operational costs. Long turnaround times not only increase the risk of default, but also unnecessarily tie up resources. They can indicate inefficient processes or escalation steps that are triggered too late. By regularly analyzing these key metrics, you can quickly identify areas where processes need to be optimized.

  • Average Days to Resolution
  • Average Days to First Payment
  • First Call Resolution Rate

These metrics can help your teams uncover where bottlenecks occur - is the initial contact too late? Does resolving follow-up inquiries take too long? How do different communication channels impact the process?

An average resolution time of 30-60 days would be considered efficient receivables management. For time from first contact to first payment, 5-15 days is a good benchmark - although it may take a bit longer for B2B matters. Ideally, 30-50% of cases should be resolved on the first call.

 

3. Contact Rate: Are you reaching the right contacts?

Even the best measures will be ineffective if debtors cannot be reached. The contact rate shows the percentage of people successfully contacted - across all channels. It's a crucial indicator of data quality, channel strategy, and responsiveness. The goal is to achieve the highest possible contact rate with the fewest number of attempts.

Some key metrics to monitor:

  • Reach Rate (actually reached individuals)
  • Valid Contact Ratio (cases with valid contact data)
  • Response Rate by channel (e.g. email, SMS, call)

A low Reach Rate often indicates outdated contact information, unfavorable contact times, or the wrong communication channel. The Valid Contact Ratio provides insights into the accuracy of contact data and signals whether data maintenance requires attention. Response Rates vary by channel - calls typically have the highest, but also require more internal effort. A/B testing can help optimize email outreach and improve results.

 

4. Process Costs & Productivity: How efficient is your team?

Efficiency in receivables management means maximising recoveries while using as few resources as possible – without compromising on quality, compliance, or customer relationships. Especially in times of high case volumes, growing regulation, and rising personnel costs, streamlined processes are the key to scalability.

Relevant KPIs include:

  • Cost per case
  • Cases per FTE (average number of cases handled per full-time employee)
  • Degree of automation
  • Case resolution rate per employee

In the B2C segment, processing costs of around €3 per case are still considered acceptable. In the more complex B2B segment, this figure can rise to €15 per case.

The average number of cases per FTE offers insights into operational efficiency — and may highlight ineffective tools or workflows. A high degree of automation (i.e. the share of process steps completed without manual effort, such as sending reminders or using a self-service portal) is generally desirable. However, this must be considered in conjunction with the success metrics outlined in section 3.

After all, high automation doesn’t automatically lead to higher recovery rates. That’s why efficiency and productivity targets should always be evaluated in the context of actual outcomes. Cost-effective processes only make sense if they also deliver results.

KPIs are invaluable tools in the debt collection industry.

They not only measure the effectiveness of current collection efforts but also guide strategic planning and operational adjustments. Regularly monitoring and adapting strategies based on KPI outcomes can significantly improve the effectiveness and efficiency of debt collection operations, ultimately leading to better financial health and customer relationships. 

Industry comparison: These KPIs are crucial in receivables management

KPIs not only measure ongoing collection efforts—they also serve as a guiding framework for strategic planning and operational adjustments. When used effectively, they help steer operational activities, identify risks early, and continuously improve processes. Companies that consistently analyze KPIs and incorporate them into decision-making safeguard liquidity, strengthen customer relationships, and boost profitability.

Which KPIs take center stage largely depends on the industry, as different business models come with different challenges. The following overview highlights which KPIs are particularly relevant in selected sectors—and why they are especially important right now: 

 

Common Mistakes in KPI-driven management — and how to avoid them

KPIs are a powerful management tool in receivables if they’re used correctly. In practice, the same pitfalls tend to crop up again and again:

  • Too many metrics, no clear ownership
    Overloaded dashboards filled with countless metrics often lead to “dashboard paralysis”: decisions are delayed, and priorities become unclear. A better approach is to focus on a streamlined set of actionable KPIs — each with clearly assigned ownership and accountability.
  • Poor data quality
    Outdated or inaccurate data makes even the best KPIs meaningless. Modern receivables management depends on real-time data. BI dashboards help by highlighting deviations instantly and enabling swift, data-based decisions.
  • One-size-fits-all communication
    Standardised messages and uniform dunning processes may appear efficient but are rarely effective. Different customer segments need tailored approaches and channels. Segmentation and channel-specific communication can significantly boost success rates.
  • No link between KPIs and action
    KPIs shouldn’t remain stuck in reports. Each one must lead to concrete action; whether that’s fine-tuning the dunning process, automating workflows, or reprioritising cases. Without that, KPIs are just numbers with no real impact  

Four steps to successful KPI management in receivables management

  1. Data integration and AI-driven prioritisation
    The foundation is built by consolidating historical collection data and training machine learning models. These algorithms assess each case based on its likelihood of repayment. Smart tools then support the prioritisation of open receivables and help determine the ideal timing for customer contact.
  2. Channel attribution
    Inspired by marketing attribution models, the system analyses which communication channels (phone, email, SMS, app push) are most effective for different debtor segments. This insight enables the creation of targeted omnichannel campaigns.
  3. Automation and personalisation
    AI-powered platforms send reminders and payment notices at the optimal time, based on behavioural patterns. Segmentation allows for more relevant, personalised communication — improving engagement and outcomes.
  4. Continuous optimisation with resolution models
    Resolution models, whether rule-based or AI-driven, are refined using real-time feedback from previous steps. These models suggest the next best action for each case — whether it’s a new payment offer, escalation to legal, or a goodwill message. The result is a self-learning system that continuously enhances performance.

From dashboard to success

With over 60 years of experience, Riverty supports international collections teams in turning KPI insights into immediate, effective, and compliant action. Ready to turn your KPIs into measurable success?