Strategic Planning & Analysis Flashcards

A collection department's DSO is 52 days and its Best Possible DSO is 38 days. What is the Average Days Delinquent (ADD)?

Answer: 14 days

ADD equals DSO minus Best Possible DSO, so 52 − 38 = 14 days.

Which metric measures how much of the receivables available to collect in a period were actually collected?

Answer: Collection Effectiveness Index (CEI)

CEI compares amounts collected to amounts available for collection, making it a direct gauge of collector effectiveness.

A manager wants to test a new early-stage dialing strategy without risking the whole portfolio. What approach is most appropriate?

Answer: Champion/challenger testing on a random sample of accounts

Champion/challenger tests a new strategy against the current one on a controlled sample so results can be compared objectively.

When building an annual collection budget, which input is most critical for projecting staffing needs?

Answer: Forecasted account volume by delinquency stage and target contacts per collector

Staffing is driven by expected workload, which depends on account volumes per stage and productivity standards.

In a SWOT analysis of a collection operation, a pending state law that restricts call frequency would be classified as a:

Answer: Threat

External factors that could harm performance, such as new regulation, are threats.

Why is DSO alone considered a potentially misleading indicator of collection performance?

Answer: It is distorted by changes in sales volume, not just collection effort

Because DSO divides receivables by sales, a spike or drop in sales can move DSO even when collection performance is unchanged.

A roll rate analysis shows 35% of 31–60 day accounts are rolling to 61–90 days, up from 22%. What is the best strategic response?

Answer: Intensify treatment at the 31–60 day stage to stop the flow

Rising roll rates signal that the earlier bucket needs stronger intervention before accounts age further.