A leading communications service provider was struggling with a rising number of delinquencies. The company had thousands of delinquent accounts and did not know which accounts it should pursue for collections, which to sell to a collections agency, and which to write-off. The firm wanted to enhance its process to prioritize delinquent accounts and improve the efficiency of its collections efforts by gaining a deeper understanding of households’ financial positions.
The company utilized IXI’s total income and ability to pay measures to gain a better understanding of which of its delinquent accounts were most likely to be able to pay their bills. Using IXI’s measures, the company was able to:
- Rank a collections file of delinquent accounts and subsequent payments made on those accounts by total estimated income and ability to pay, revealing that delinquent households in the highest decile (Decile 1) were almost 3 times more likely to pay off their bills than households in the lowest decile (Decile 10)
- Develop treatment groups based on each account’s estimated income and likely ability to pay decile: Actively Pursue; Monitor and Assess; and Near-term Write Off or Sell
Assuming that the firm had 1 million delinquent accounts and assigned each to a treatment group, the firm can expect to collect a total of $13.3 million:
- About $5.2 million (23%) of delinquent balances from the Actively Pursue segment
- About $8.1 million (17%) of delinquent balances from the Monitor and Assess segment
