Delinquency Roll Rates

Bill Garcia
June 14, 2010 | COMMENTS

As some of you know, measuring your delinquency roll rates is a powerful tool in determining collector performance and the results of your collection department collection efforts.

Some background on roll rates, it is a method of measuring the beginning month delinquency numbers and dollars in the various delinquency aging buckets: e.g. 10-30, 31-60, 61-90, 91-120, 121-150, 151-180, and 180+, against the month-end delinquency numbers and dollars in percentages.

Example:

Roll-Rate Goal Matrix

The actual percentage may vary by credit union, region, and the credit quality of the loan portfolio. And of course the current economy certainly has an impact on roll rates.

The most common method for measuring collection results for credit unions is the percent of total loan balances over 60 days delinquent. Most credit unions do not measure individual collector performance. The credit unions that do measure collector performance usually only measure dollars collected by collector and sometimes the percent promises kept. In addition some credits union measure the number of collection calls collectors' make on a daily basis. While these are good measurement tools, we also recommend measuring roll rates at the department level and individual collector level.

Once you are able to capture the roll-rate data you can establish roll-rate goals for the collection manager and individual collectors.

Establishing roll-rate goals and integrating them into your collector performance scorecards is very effective in improving collection results and your bottom line.

Bill Garcia is president/CEO of Solutions in Finance, a lending and collections consulting firm based in Los Gatos, California. Contact him at garciawr@solutionsinfinance.com or 888-447-0324 ext. 113.