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Paying Less is Not Always Best
When it comes to selecting a collection service there are many things to consider. Here are a few:
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Price is only part of the equation and is sometimes misleading. What agencies do to help recover materials/fines varies dramatically. For example, most library overdue balances are relatively low. Consequently, many traditional collection agencies and letter writing services primarily send out collection letters as opposed to making a lot of telephone calls and doing skip tracing to find people with incorrect addresses. We have found that making telephone calls improves recovery results from 15 to 30 percent compared to just sending letters. Also, libraries typically have a lot of patrons with incorrect addresses. Skip tracing is important to try and find patrons so they can be contacted. Skip tracing is labor intensive and most agencies only do skip tracing on relatively large balance accounts if at all. Without skip tracing, a library will usually never see overdue materials again from patrons with incorrect addresses. Other important collection steps that vary considerably from agency to agency are credit flagging and credit reporting. Credit flagging can be utilized to flag incorrect address accounts with the credit reporting agencies so if they obtain a new address it will automatically be received so the patron can be contacted. This is a good technique for finding patrons that are not initially found through skip tracing efforts. Credit reporting is another tool that adds great strength to the collection process. The probability of being credit reported causes many patrons to respond that otherwise never would. Credit reporting should be utilized as a last resort to get full value from the leverage or urgency created by the threat and to give the patron sufficient time to respond. Far more people respond because of the impending reporting than do after they have been credit reported. The use of credit reporting varies from agency to agency. The above are examples of how collection services can vary dramatically in what they do. Therefore, results can also vary significantly based upon the techniques and tools utilized. Thus, price alone can be misleading. A better evaluation would be to look at the net benefit to the library. It is very possible that paying more in collection fees could yield the library a higher net benefit. The following simple comparison is an illustration: |
| Agency A | Agency B | Agency C | |
| # Accounts Turned Over | 400 | 400 | 400 |
| Dollars Amount Materials/Fines | $25,000 | $25,000 | $25,000 |
| Materials Recovered | $6,000 | $8,900 | $8,900 |
| Money Recovered | $1,500 | $3,600 | $3,600 |
| Collection Fees | $2,600 | $3,580 | $5,000 |
| Net Benefit to Library | $4,900 | $8,920 | $7,500 |
| Money Recovered vs. Fees | -$1,100 | +$20 | -$1,400 |
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As you can see from the above comparison, the lowest or highest price is not always best for the library in terms of Net Benefit. A more complete and comprehensive service will produce better results. Even though a library may pay out more for a comprehensive collection service, it is usually well worth it. The above comparison does not take into account the amount of paper-work and library staff time required for the collection process. Time is money and needs to be considered as a cost as well. If the data transfer process is completely automated electronically so paper-work is eliminated and only minimal library staff time is required, the library can enjoy considerable savings and a higher net benefit. Also, it is important to many libraries that collection fees do not exceed money recovered. Having a budget neutrality guarantee is an important consideration. |
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| Copyright 2003 Unique Management Services, Inc. 800-879-5453 119 East Maple Street, Jeffersonville, IN 47130 info@unique-mgmt.com |
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