In our previous blog entries on legal collection profitability we discussed a number of elements that needed to be tracked to accurately measure profitability and the efficiency of internal operationally related processes. The issue to address now is how do you easily take these measurements and associate them with the appropriate clients, portfolios or in some cases claims in a timely fashion. We realized how mission critical this level of analysis was to an organization's profitability when designing Cogent. We addressed this challenge by leveraging a Microsoft Relational Database to store data and developed a unique data model capable of tracking this level of data and the associated relationships.
Leveraging Microsoft's SQL Server DBMS provides an organization with complete access to the entire Cogent data model and the ability to use standard reporting tools to build custom reports directly from the production data. This combination of features minimizes the Total Cost of Ownership (TCO) an organization incurs in maintaining their software platform and ensures that the data being used for decision-making is always up to the moment current.
Having a relational database is a big part of the solution to the issue we're discussing but it doesn't solve it by itself. In order to generate the type of reporting we're describing the data model within the relational database needs to support both the capture of this type of information and the ability to group that data together as needed. This is where Cogent separates itself from other collection software solutions. The Cogent data model supports the tracking of three types of transactions: Claim related, Client / Portfolio related and Activity / Process related. It is the combination of these three groups of transactions that determines the actual profitability of a client or a process.
Here is how it works: Simple transactions such as payments, legal costs are tracked on a registry at the claim level. As these transactions are recorded at the claim level the costs and fees that need to be invoiced to clients are automatically created as "statement items" and stored at the client level. This process allows a relationship to be established between the statement items recorded at the client level and the original transactions recorded at the claim level. This relationship provides the ability to quickly and efficiently generate billing to your clients and allows you to track how quickly each client pays your fees or reimburses you for costs incurred on an account.
To assist with measuring activity / process related costs, Cogent allows you to associate an "operational cost" value to any activity that can be recorded on an account by a user or the system itself. These activities could be anything such as mailing a letter, leaving a voicemail message, running a data search on the debtor or any other cost that would get documented on an account. As these events are recorded on your inventory of claims the costs can be totaled and grouped by the specific activity types allowing you to see your incurred operational expenses on each claim. The relationship between claims, portfolios and clients that exists in the Cogent data model allow you to group these operational expenses at a claim, client, portfolio or organizational level.
When trying to measure the efficiency of specific processes having the ability to average or compare the differences in time between two system events is a valuable capability. Cogent's data model along with the functions within Microsoft's SQL server allow an organization to quickly and easily perform these comparisons during the data retrieval process. Identifying the average number of days between placement and suit filed date or suit filed date and judgment date can be identified easily with a single data query directly against production data. This information can be summarized by month, quarter, year etc. to bring visibility to performance trends that may be developing within a business process. Additionally, the relationships within the data model enable you to filter this data analysis to a specific client, portfolio, pool or teams groups of claims.
Having ready access to key data delivers analytics without the headaches. Managers using real metrics and measurable results can make better decisions resulting in higher efficiency and profitability. If you want to get a glimpse at some of these models please click here.
With this three part blog series we've attempted to introduce some thought provoking ideas on how to measure not just revenue but actual profits. Profitability is what we all strive for but measuring how you are performing and what you are achieving are the real benchmarks for the basis of success. Many firms are being asked to expand into multiple states and offer more services (Bankruptcy, Probate, etc.). Growth is good but needs to be managed efficiently. This is why Cogent is excited by our client's growth but also interested in that growth being efficient and profitable. In 2010 Cogent will continue to develop more tools and reporting models that help to address these topics. Please share some of your ideas with us so that we can take them into consideration as we expand our product development in this area.