PRESS RELEASE: Study Finds Collection Agencies Awash in Work; Economy Forcing Strategy Shift
November 18, 2008
NEWS RELEASE
For Immediate Release # # # Debt collection agencies currently have plenty of work from creditors seeking to recover on past due accounts. But the economic downturn is forcing collectors to modify their strategies. ROCKVILLE, Md., November 18, 2008 - Debt collection agencies in the United States are experiencing a surge in account placements from their clients: cash-strapped banks and creditors. But the pressures being put on consumers by the current economic downturn are forcing collectors to rethink their recovery strategies, according to a new survey conducted by accounts receivable management advisory firm Kaulkin Ginsberg. More than 60 percent (61.1%) of debt collection agency respondents said that account placements were "moderately" or "significantly" higher in the third quarter of 2008. Further, over 77 percent (77.2%) of these agencies are expecting increases in the next six months. But the economic recession has impacted collectors' ability to recover money, according to the survey. As such, more agencies are planning to alter their debt collection strategies. More than 90 percent of collection agencies said that they were "Somewhat Likely" or "Very Likely" to modify collection strategies to more effectively align with economic conditions. In the second quarter survey, 83.9 percent of respondents answered the same way. Survey respondents were given the opportunity to express their thoughts at the end of the questionnaire. Many discussed their company's shift in collection strategies. "We have already modified our collection strategy to emphasize down payments and periodic payments in light of the decreasing liquidity of our debtor populations," wrote one survey participant. "While placements have doubled this year and will again double next year, front-end collections are staying the same. Middle class America is out of money. The only thing leading the pack is our litigation debt," wrote another. "We have been hearing from creditors and collection agencies that economic conditions were leading to higher placement volumes, but lower collection rates," said Patrick Lunsford, Senior Editor of insideARM.com. "The latest survey results provide data to back up that anecdotal evidence. And of course, collection agencies are realizing that they need a shift in collection strategy." The full Quarterly Credit & Debt Collection Industry Confidence Survey report is available for free at www.insidearm.com/go/free-reports/3rd-quarter-confidence-survey-report. The Quarterly Credit & Debt Collection Industry Confidence Survey was conducted from September 30 to October 21 and had more than 750 participants from the accounts receivable management industry. The survey was conducted along three distinct "tracks" of the accounts receivable management industry: banks (and other creditors), collection agencies & debt buyers, and vendors to the ARM industry, such as software and call center technology providers. Kaulkin Ginsberg launched the inaugural quarterly confidence survey at the end of the second quarter this year. This survey provided a point of reference for comparing ARM industry sentiment as the economy has worsened. About Kaulkin Ginsberg
Kaulkin Ginsberg is the leading strategic advisor for the accounts receivable management (ARM) industry. For ARM service providers, our value-add services focus on analysis, growth, and exit strategies. For credit grantors, our focus is on optimizing receivables management strategies. Kaulkin Ginsberg's media division, insideARM.com®, is the worldwide leader in providing timely news and insight on the recovery of debt in all industries. Kaulkin Information Systems creates secure and affordable workflow, document, and business process management technologies. Read more about Kaulkin Ginsberg at www.kaulkin.com. # # #
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