NETBACK – The dollar amount collected by the agency less the agency’s fee. (This is the standardized formula for measuring collection agency performance.)
The value of a collection agency cannot be measured soley by the fee it charges. Many agencies compete for business only on fees, but in reality many of the agencies charging very low fees are those making the least effort to collect your money. Therefore, you should consider many other factors when choosing a collection service. These factors include the Netback to you, (the agency’s net cash return to you), the quality of its services and how beneficial they will be to you, the knowledge, experience, and courteous demeanor of the agency’s staff, and the accuracy, thoroughness, and timeliness of your reports.
The reason you hire a collection agency is to recover money due your company. Because different agencies charge different fees, it can be difficult to determine which agency is doing the best job. The standardized measurement used to compare agency performance is Netback and is calculated as follows;
- Amount Placed x Gross Recovery Percent = Amount Collected
- Amount Collected x Fee Percent Charged = Fees Charged
- Amount Collected – Fees Charges = NETBACK
|Peerless Credit Service||Competitor|
|Placed $25,000||Placed $25,000|
|Gross Recovery x 30%||Gross Recovery x 20%**|
|We Collect $7,500||They Collect $5,000|
|Our Fee % 25%||Their Fee % 18%|
|Our Fee $1,875||Their Fee $900|
|Netback to you $5,625||Netback to you $4,100|
Peerless puts an additional $1,525 in your pocket for every $25,000 in accounts placed !
** Because of our quality staff and proven techniques, our average collection recovery is significantly higher than the national average. Our team consistently outperforms the competition.