BOTTOM LINE NET PERFORMANCE CHART

 

When searching for a collection agency the collection fee rate is not important until the Recovery Ratio is factored in. A credit grantor should focus on the performance of an agency, which is a major contributor to the "Bottom Line Net." Bottom Line Net is the total return to a creditor after deducting agency fees.

The following provides a scenario of what is netted at the bottom line. For this illustration the Competitor charges 10% and Williams & Williams, Inc. 16%.

 

 

Competitor

Williams & Williams, Inc.

Amount Placed

$100,000

$100,000

Amount Collected

$40,000 (40%* Recovery Ratio)

$43,000 (43% *Recovery Ratio)

Collection Fees

$4,000 (10% Fee)

$6,950 (16% Fee)

Bottom Line Net

$36,000

$36,050

*Recovery Ratio ($ collected/ $ placed) is the dominant factor affecting the Bottom Line Net.

 

In this example of bottom line net performance, Williams & Williams, Inc. had a higher Collection Fee of 6%. By collecting just 3% more of the Amount Placed, Williams & Williams, Inc. offset the 6% higher Fee by delivering more “net dollars” to the Bottom Line.

It is important when selecting an agency to understand how the Recovery Ratio and the Fee rate work in combination to affect the Bottom Line Net. We guarantee a much higher Recovery Ratio difference than the 3% illustrated above.