Risk-Based Pricing Program

An intelligent pricing approach for collection agency partners designed to yield improved netback results.

There are two financial components of the Risk-Based Program (RBP):

1. SCORE's program increases dollars that agencies collect compared to a flat fee-for-service compensation approach.
2. SCORE's program encourages collection agencies to focus on their strengths for greater productivity. This is done by reviewing the historical performance of agencies and to determine the type of accounts they are better suited to collect. By ranking and segmenting accounts into low, medium and high risk, agencies are sent accounts they have been historically successful at collecting. This sets a benchmark for agency performance and maintains vendor management best practices.

Identify the best agencies to collect more dollars.

Each quality segment will have a minimum of 2 agencies. The best agencies will work high quality paper since this represents the greatest exposure. Exercise is iterative and should appropriately incent all agencies to collect. Commissions should reflect the relative difficulty in collecting each quality segment, with an emphasis on agency yields and net back dollars for the credit grantor.

Example: Low scoring (i.e. high risk) segment = 40%. High Scoring (i.e. low risk) segment = 15%.

Gain control and capitalize agency strengths by scoring and segmenting accounts.

Gaining control and managing your collection agency's performance to capitalize their strengths begins by asking:

1. Which account should you place at which agency?
2. How to match your accounts to agencies for best results?
3. Which agencies are best suited for collecting specific segments of your accounts?
4. How can you improve the agencies’ effectiveness and results after you place accounts?
5. How do you gain greater visibility and knowledge of agency performance?
6. How can you put more structure around agency assignment programs such as quantifiable placement decisions and strategy development?
7. How to use the knowledge you gain from past performance for ongoing improvements in treating your accounts?

Reward agencies based upon performance and strengths.

As a credit grantor, you can increase your netback by creating a structure that rewards agencies based upon their strengths. Agencies are assigned segments of accounts they’ve had the most success collecting in the past. This agency focus increases results, recoveries, commission dollars, liquidation rates, yields per account and commission dollars in each segment. As a consequence, your netback also increases. To ensure the integrity of your program, results are monitored on a regular basis for any required changes to ensure the continued performance of SCORE cards.