Collection Services Can Make Money! Disbelief Is Widespread

Collection Agencies Set For Better Times?

Earlier this week, the Commerce Department announced that the recession had officially ended. That's important news for collection service professionals because liquidation rates are only going to rise when people begin to get back to work. That's when debtors are going to find that they have enough spare cash in their pocketbooks to start to pay down what they owe.

But it's much too early to make plans for that elusive 2009 bonus. Unemployment is a 'lagging indicator', which means that it will be a long time before it responds to the economy coming out of recession.

A 2010 bonus isn't out of the question. But there are plenty of pessimists out there who think that the recovery will stall when government stimulus spending runs out, or that this was always going to be a double-dip recession.

But ignore them for now. Instead fantasize about that big 2010 bonus.

Collection Service Shocks with Stellar Results

It is, perhaps, a measure of just how low industry observers' expectations have become that Merchant Capital Group's third quarter results were greeted with such astonishment. But then again to achieve the figures it did in the economic conditions it faced was truly remarkable.

Headline results included:

• At $125.7 million, gross collections were up 29 percent on the same period last year


• Even excluding portfolio sales, collections increased by 27 percent


• Merchant spent $77.7 million buying receivable portfolios with a face value of $2.2 billion

Ooops

Any feeling of satisfaction amongst Merchant executives can only have been heightened by the fact that the results were published just one day after Reuters ran a story predicting:

The weak financial health of the U.S. consumer is expected to hit third-quarter results of debt collectors who buy bad loans from big financial institutions, and chase the defaulters to make money.

Companies like... Merchant Solutions Capital Group Inc (ECPG.O) buy bad debt at very low prices -- pennies on the dollar -- and then aggressively pursue repayment on them.

Plenty of people at Merchant have no reason to fantasize about bonuses, either in 2009 or 2010.

Collection Agencies' Industry Body Wins Prestigious P.R. Award

Also this week, the Association of Credit and Collection Professionals (ACA) received a prestigious honor from the public relations industry when it won a PR News Platinum Award. This may not be in the same league as the recession ending, or a collection service company posting exceptional results, but it is still an important story.

The award was for the Ask Doctor Debt online service. According to the ACA, Ask Doctor Debt "...is a fast, free and friendly Web site for consumers with credit and debt questions." And it's "...aimed at serving consumers by increasing financial literacy."

It certainly seems to be doing a good job. The ACA says that Ask Doctor Debt reached 25 million consumers.

Not All Good News

Of course, these three pieces of good news could easily be missed amongst the sea of bad press on which the good ship SS Collection Agencies constantly sails. Just this week, the Washington Post ran a feature entitled Calling the debt collectors on abuse. And the Orlando Sentinel has been chastising state politicians for failing to regulate collection service companies tightly enough. Its headline was State rarely punishes rogue debt collectors.

All of this is standard fare. But it does raise an important question.

The ACA's Ask Doctor Debt initiative won its P.R. award in the "On a Shoestring Campaign" category. That's because the ACA effectively had no budget for it. All the work was done either in-house, or by members who volunteered support.

If collection agencies want to resist greater regulation, and win over some further measure of public support, then why won't they invest in industry bodies that have the resources to deliver effective lobbying, and quality public relations? Of course times are tough, but--as Merchant proved--there's still money around.

Surely some tiny fraction of it should be invested in securing the long-term viability of the collection service industry.

Collection Agencies Set For Better Times?

Earlier this week, the Commerce Department announced that the recession had officially ended. That's important news for collection service professionals because liquidation rates are only going to rise when people begin to get back to work. That's when debtors are going to find that they have enough spare cash in their pocketbooks to start to pay down what they owe.

But it's much too early to make plans for that elusive 2009 bonus. Unemployment is a 'lagging indicator', which means that it will be a long time before it responds to the economy coming out of recession.

A 2010 bonus isn't out of the question. But there are plenty of pessimists out there who think that the recovery will stall when government stimulus spending runs out, or that this was always going to be a double-dip recession.

But ignore them for now. Instead fantasize about that big 2010 bonus.

Collection Service Shocks with Stellar Results

It is, perhaps, a measure of just how low industry observers' expectations have become that Merchant Capital Group's third quarter results were greeted with such astonishment. But then again to achieve the figures it did in the economic conditions it faced was truly remarkable.

Headline results included:

• At $125.7 million, gross collections were up 29 percent on the same period last year


• Even excluding portfolio sales, collections increased by 27 percent


• Merchant spent $77.7 million buying receivable portfolios with a face value of $2.2 billion

Ooops

Any feeling of satisfaction amongst Merchant executives can only have been heightened by the fact that the results were published just one day after Reuters ran a story predicting:

The weak financial health of the U.S. consumer is expected to hit third-quarter results of debt collectors who buy bad loans from big financial institutions, online funders, and chase the defaulters to make money.

Companies like... Merchant Capital Group Inc (ECPG.O) buy bad debt at very low prices -- pennies on the dollar -- and then aggressively pursue repayment on them.

Plenty of people at Merchant have no reason to fantasize about bonuses, either in 2009 or 2010.

Collection Agencies' Industry Body Wins Prestigious P.R. Award

Also this week, the Association of Credit and Collection Professionals (ACA) received a prestigious honor from the public relations industry when it won a PR News Platinum Award. This may not be in the same league as the recession ending, or a collection service company posting exceptional results, but it is still an important story.

The award was for the Ask Doctor Debt online service. According to the ACA, Ask Doctor Debt "...is a fast, free and friendly Web site for consumers with credit and debt questions." And it's "...aimed at serving consumers by increasing financial literacy."

It certainly seems to be doing a good job. The ACA says that Ask Doctor Debt reached 25 million consumers.

Not All Good News

Of course, these three pieces of good news could easily be missed amongst the sea of bad press on which the good ship SS Collection Agencies constantly sails. Just this week, the Washington Post ran a feature entitled Calling the debt collectors on abuse. And the Orlando Sentinel has been chastising state politicians for failing to regulate collection service companies tightly enough. Its headline was State rarely punishes rogue debt collectors.

All of this is standard fare. But it does raise an important question.

The ACA's Ask Doctor Debt initiative won its P.R. award in the "On a Shoestring Campaign" category. That's because the ACA effectively had no budget for it. All the work was done either in-house, or by members who volunteered support.

If collection agencies want to resist greater regulation, and win over some further measure of public support, then why won't they invest in industry bodies that have the resources to deliver effective lobbying, and quality public relations? Of course times are tough, but--as Merchant proved--there's still money around.

Surely some tiny fraction of it should be invested in securing the long-term viability of the collection service industry.