The manager of a well-run credit and collections department will likely want to compare current performance levels against those of other companies. An excellent resource for this information is the Credit Research Foundation, which is accessible on the Internet at www.crfonline.org. The Foundation conducts a number of research activities to benefit credit and collection business managers. These activities include benchmarking studies, quarterly surveys on domestic trade receivables, an annual bad debt survey, and a variety of magazines and technical references. Of particular interest is its comprehensive annual benchmarking report, which includes the following information:
- Financial performance, including average days delinquent, the collection effectiveness index, and deductions as a percent of A/R items
- Deduction metrics, including deduction turnover and the number of deductions processed per employee
- Efficiency metrics, including various costs per transaction and employee
- Outsourcing metrics, including the percent of workload outsourced for credit risk and collections
- Cost analysis metrics, including IT costs and outsourcing costs
- Business practices metrics, including the percentage of companies charging a late fee, allowing electronic payments, and shipping to new customers with no prior credit investigation
- Organization structures and responsibilities, including reporting relationships and department responsibilities
- Technology used, including credit scoring systems and collection management systems
The measurements noted here are only a small subset of the total number listed in the benchmarking survey, a sample copy of which is posted on the Foundation’s website.
All of this information is available to Foundation members, which currently includes more than 500 companies. Corporate memberships cost $795 per year.