What is the difference between a promise to pay and a payment arrangement?

Two kinds of commitment

• A promise to pay is one commitment: this amount, on this date. Nothing has been paid when the call ends. It is an outcome code the collector enters, and it either lands or it does not.
• A payment arrangement, often called a payment plan, is an agreed schedule: a set amount on set dates over weeks or months, until the balance or an agreed settlement is paid. It is built inside the plan rules the agency and its client have set.

A payment taken during the call is neither. It is money already collected.

Where software blurs the line

Collection systems do not agree on the labels. insideARM’s tip on promise-to-pay settings (2006) describes recurring promises, where the consumer commits to set amounts on set dates, which is an arrangement by another name; it suggests sending them to a supervisor’s review queue to check they meet the minimum payment rules and have realistic dates. Oracle’s collections documentation describes a promise-to-pay agreement that can be paid in one payment or in instalments, where a missed instalment breaks the whole agreement and cancels the instalments still to come.

So before comparing your numbers with anyone else’s, check what your own system means by each code. A floor where "promise" includes plans and a floor where it does not will report very different promise and kept rates for the same work.

How floors code them

In our view the codes that hold up keep three outcomes apart:

1. Payment taken on the call. The amount is known and collected.
2. Promise to pay. One amount, one date, followed up if it does not land.
3. Arrangement. A schedule, with the first payment date and the number of payments recorded.

Some floors also log a vague "I’ll pay soon" separately, so it does not count as a promise at all. Whatever you choose, write it down in your outcome code list and keep it from month to month.

Why it matters when you measure

• They break differently. A promise breaks once. An arrangement can break at the first payment or the eighth, so one kept rate across both hides where plans fail. Track the share of scheduled payments that land, by the number of payments into the plan.
• They are different sizes. A promise is often a single larger amount; an arrangement spreads a balance into smaller payments. Counting each as one conversion treats them as equal, which is why dollars collected per account contacted is the better score for comparing collectors or routing.
• A plan the consumer cannot keep collects little. In our view an arrangement agreed in a hurry and broken next month is worth less than a smaller one that runs to the end. The plan rules are the agency’s and its client’s (hardship programme or standard plan). The collector’s part is to find, inside them, a payment the consumer can actually make. Why empathy matters on a collection call.

The formulas for promise-to-pay rate and kept rate, and which denominator each needs, are in how to calculate RPC rate, promise-to-pay rate and kept rate. When a missed promise should be marked broken, and who should follow it up, is in should a broken promise go back to the collector who took it?

Sources

• insideARM, Promise to Pay: Parameter Settings A 2006 trade press tip on how collection systems handle promises, tolerances and recurring promises.
• Oracle, Managing promise-to-pay agreements Collections software documentation on single and instalment promises and what happens when one is broken.