The collections department is not exactly known for having a customer service function. Instead, it has the reverse -- collection disputes with customers. Though collection disputes appear to be the reverse of customer service, they can be managed in the same way. In the case of customer support, customers are pleased when their issues can be resolved as expeditiously as possible. Similarly, the controller is pleased when disputed payments can be quickly resolved, since this means that cash flow is accelerated, or at least that the amount of the bad debt reserve can be more accurately estimated.
Since time is money, it makes sense to track the time required to resolve collection disputes. How can we measure this collection dispute cycle time? The simplest approach is to use the same case tracking system used by the customer support function, and record within it the beginning and end dates for each dispute, as well as the amount in dispute, the cause of the problem, and who is handling its disposition. When summarized over a large number of disputes, this gives management a good idea of the average time required to settle a dispute, as well as which customers are repeatedly involved with the longest-running disputes, what root problems cause them, and which collections staff have the best (and worst) ability to quickly resolve disputes.
When used properly, an ongoing examination of collection dispute cycle time can result in decisions to eliminate more difficult customers, provide training to those employees who have problems resolving disputes in a timely manner, and to correct the underlying causes of disputed payments.
The measurement can be deliberately skewed by altering the recorded beginning and end dates of dispute cases. To keep this from happening, do not tie reductions in dispute duration to a bonus plan; this ensures more honest record keeping.