Collections Optimization: Effective Application of the 80/20 Rule
Posted: Mon Dec 23, 2024 6:15 am
Do you know what the “ 80-20 Rule ” is? You’ve probably heard about it at school or university. Or maybe in your working life. And it refers to the famous Pareto Law . But what does it mean?
The Pareto Law 80 20 , also known as the Pareto principle , was created by Vilfredo Federico Pareto in the late 19th century. An Italian philosopher and economist, he realized that 80% of the effects in many phenomena and situations come from 20% of the causes.
Although there are no scientific grounds to justify it, across the sectors in which it has been applied, it has been observed that in different scenarios a small set of causes can generate most of the results.
Why is this important? Because if we know how to identify which causes can have the greatest positive impact, we can invest more effort and resources in them, thereby optimizing the results.
The 80/20 rule also applies to the debt collections field. We can see how a simple action, such as investing in automated debt collections software , can effectively resolve a higher percentage of cases, significantly reducing buy uae database time and costs associated with manual management. This allows the team to concentrate its efforts on the most complex or critical cases, thus improving the overall efficiency of the debt collections process .
4-Automate your debt collection management-banner
What will you find in this text?
Applications of Pareto's Law in Collections
1. Identify who your key customers are
2. Identify which debtor clients represent the largest amount of overdue debts
3. Identify the factors that represent 80% of debt collection problems
Benefits of Rule 8020 in collections
1. By applying Pareto's Law you will be able to prioritize the most important actions
2. Time wasted on non-productive tasks will be reduced
3. Allows workers to focus on actions with a high probability of results
Applications of Pareto's Law in Collections
But this is not the only way in which Pareto's law in collections can be applied. In this post from Moonflow, accounts receivable software , we tell you more.
The Pareto Law 80 20 , also known as the Pareto principle , was created by Vilfredo Federico Pareto in the late 19th century. An Italian philosopher and economist, he realized that 80% of the effects in many phenomena and situations come from 20% of the causes.
Although there are no scientific grounds to justify it, across the sectors in which it has been applied, it has been observed that in different scenarios a small set of causes can generate most of the results.
Why is this important? Because if we know how to identify which causes can have the greatest positive impact, we can invest more effort and resources in them, thereby optimizing the results.
The 80/20 rule also applies to the debt collections field. We can see how a simple action, such as investing in automated debt collections software , can effectively resolve a higher percentage of cases, significantly reducing buy uae database time and costs associated with manual management. This allows the team to concentrate its efforts on the most complex or critical cases, thus improving the overall efficiency of the debt collections process .
4-Automate your debt collection management-banner
What will you find in this text?
Applications of Pareto's Law in Collections
1. Identify who your key customers are
2. Identify which debtor clients represent the largest amount of overdue debts
3. Identify the factors that represent 80% of debt collection problems
Benefits of Rule 8020 in collections
1. By applying Pareto's Law you will be able to prioritize the most important actions
2. Time wasted on non-productive tasks will be reduced
3. Allows workers to focus on actions with a high probability of results
Applications of Pareto's Law in Collections
But this is not the only way in which Pareto's law in collections can be applied. In this post from Moonflow, accounts receivable software , we tell you more.