Glossary KB

B2C collection glossary: Where we can, we will explain the differences between collections from private customers (B2C) and collections from other businesses (B2B)

Collection agency glossary of terms: Sometimes Collections agencies have their jargon. We will do our best to provide here an explanation of these terms adapted to the outsourced collections world.

Customer lifetime value – CLTV: This is a quantitative measure of the total profit a customer is expected to generate for the firm over their entire relationship. It considers factors like repeat purchases, average order value, customer churn rate, and the cost of acquiring and retaining customers. A high CLTV indicates profitable, loyal customers who contribute significantly to the firm’s long-term financial health.
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Debt collections terms: We hope to adapt in this glossary proper definitions of Debt collections terms, and try to explain why our balances have nothing to do with equilibrium 🙂

Effectiveness: The quality of producing an intended or desired result: For maximum effectiveness of your weight loss plan, you need to combine exercise with a healthy diet.
The quality of producing a deep or vivid impression: We were struck by the evident appeal and effectiveness of these short, dramatic, upbeat video stories.
Read also: “Effectiveness” vs. “Efficacy” vs. “Efficiency”: When To Use Each Word For The Best Results

Efficiency: The state or quality of being efficient, or able to accomplish something with the least waste of time and effort; competency in performance.
Accomplishment of or ability to accomplish a job with a minimum expenditure of time and effort.
Read also: “Effectiveness” vs. “Efficacy” vs. “Efficiency”: When To Use Each Word For The Best Results

First Time Right (FTR): First Time Right (FTR), is a concept intended to ensure that activities are performed correctly the first time so that no rework is necessary. By avoiding errors and the associated corrections, costs are to be saved while quality increases.
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Full Kit: The concept of “full kit” is a fundamental principle within the Theory of Constraints approach. Essentially, a full kit means that you have everything you need to carry out your work before starting it. By definition, this also means that you don’t start working on items that you shouldn’t be working on.
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Key Performance Indicator (KPI): Key performance indicators (KPIs) refer to a set of quantifiable measurements used to gauge a company’s overall long-term performance. KPIs specifically help determine a company’s strategic, financial, and operational achievements, especially compared to those of other businesses within the same sector.
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Open Credit: Open credit is a payment method with no collateral a pre-approved means of payment which is subject to agreed commercials or agreed payment terms. It is a credit to be repaid at the end of an agreed payment period (the payment terms), while the customer does not provide any method of payment in advance.
Read more: The Collection process – introduction

Pareto principle: The Pareto principle is an empirical law that states that about 80% of the products are caused by about 20% of the influencing factors. In management theory, it has been translated to the fact that with a correct distribution of resources, the use of 20% of the resources will result in obtaining 80% of the product. Or in other words: collection from 20% of the right customers will result in collection of 80% of the total collection that can be collected.
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SLA – Service Level Agreement: SLA stands for “Service Level Agreement.” It is a formal contract between a service provider and a client that defines the level of service expected from the service provider. SLAs are output-based in that their purpose is specifically to define what the customer will receive. They typically include metrics by which the services are measured, responsibilities and expectations of both parties, and remedies or penalties for non-compliance. Common metrics included in an SLA might cover service availability, performance, operation times, and response times for handling customer issues or service requests. SLAs are fundamental to ensuring both parties have a clear understanding of service expectations and help manage and measure service delivery effectively.

Secret Shopper: This classic term evokes the image of someone going undercover to assess a business’s service firsthand. In the context of online interactions, a secret shopper might create a fake customer profile to interact with customer service representatives, make purchases, or navigate websites and apps. it is important in collections to run scenarios of vulnerable customers or annoying customers to evaluate the reactions and conduct of your team.

Systemic vision: A systemic vision highlights subordinate and/or superordinate relationships of the different structures and relationships between the aims of the organization and the results obtained.
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WIP – Work in Process: The WIP theory belongs to the “family” of models that examine the management of the production processes and supply chain management. Its main statement is that we must reduce to a minimum the number of products in the work process at any point in time. The reason for this is that products in the process require storage space, require financial investments in raw materials and multiples entail a long series of risks – from the possibility of interruptions to the normal production process due to multitasking to the possibility that the products left the process after their expiration date.
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