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Collection Agency Industry Today: Some Facts, Figures, and Opinions
Collection Agency Profits: No Easy Task
People who run collections agencies must be fed up with the enormous gap between how the public perceives their businesses, and the reality. Right now, for example, most outsiders assume that everyone in the industry is getting fat on the recession. They think it's obvious: there are record levels of overdue debt, so collections agencies must be knee-deep in profits.
If only. The reality is very different. Kaulkin Ginsberg has just published its latest quarterly Confidence Survey Results, Summer 2009 for the industry, and the report doesn't make happy reading.
Collections Agencies, Blood, and Stones
Nearly a third of collections agencies rated their current performances in collections, and portfolio liquidations as weak or very weak. And very nearly another third of respondents rated their performances as average. That left only 34.4 percent who said that they were performing strongly or very strongly.
But, at the same time, two-thirds of collections agencies report moderate or significant increases in the volume of work (account placements or available portfolios to purchase) that they're receiving.
Together, those figures mean that there's more work to do, but--for many--very little in the way of additional rewards. Nobody likes being in that situation.
Employment
And fewer are. Nearly a third of collections agencies that responded to the survey had reduced their workforces during the second quarter of 2009. That is an extraordinary measure of the squeeze that the industry is enduring. And one can only imagine how much pressure those who remain are under as fewer employees are faced with rapidly expanding caseloads.
But things are looking up. Only 18.3 percent of respondents plan to reduce their headcounts during the rest of this year, while 40.9 percent expect to recruit more people. So perhaps some of those who have been made redundant will soon be back.
Collection Agency Industry: Agile, Proactive and Responsive
Anyone who knows the collection agency industry will be unsurprised to learn that most firms are not taking this lying down. More than two-thirds of respondents said that their company was planning to harness new technologies--or upgrade existing ones--to help them improve their collection performance.
The most popular technology plan was the deployment of business analytic solutions, followed by collection software system upgrades, additional dialer seats, and hosted contact services.
Next week, this column will look at some of the technologies available to collections agencies.
A Brighter Future for Collections Agencies?
The good news in the Kaulkin Ginsberg report (besides that concerning employment prospects) is that many see a light at the end of the tunnel.
Virtually 60 percent of respondents expected their collection agency to be performing strongly or very strongly in a year's time with respect to collections and portfolio liquidations. And 74 percent are forecasting moderate or significant increases in the volume of work they will have in the summer of 2010.
Not All Plain Sailing
Of course, the collection agency industry still faces some serious challenges. For example, many collections agencies expect bankruptcy, and unemployment rates to have a major or fairly major impact on their recovery efforts.
However, slightly fewer than half predict that new, consumer-friendly laws will have a similar effect. What are the other half thinking?
Have they failed to notice the Federal Trade Commission's continuing consultations? Did they not notice that Congress has been holding hearings on the subject? Greater regulation is a real and immediate threat to the industry.
And it's one that more people in collections agencies need to take seriously.
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