Collection Agencies Modify Strategies to Recover Money From Cash-Strapped Consumers
Debt collection agencies in the United States are experiencing a surge in account placements from their clients. But the pressures being put on comsumers by the current economic downturn are forcing collectors to rething their recovery strategies, according to a new survey conduted by the accounts receivable management advisory firm Kaulkin Ginsberg.
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.
“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.
“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 Kaulkin Media publication on accounts receivable management. “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.”
“More and more accounts are going out to debt collectors, but it’s harder than ever to collect,” said John Nemo, a spokesman for ACA International, a Minneapolis-based trade group that includes 3,500 of the country’s estimated 4,500 collection agencies.
“The fact that patients may be working with more than one collection agency for their debts needs to be considered,” says ProSperus President and CEO, Tom McBride. “Collection agency results may well suffer as more than one firm tries to collect on a fixed amount of dollars. This is definitely a test of how good your practice’s collection agency really is.
ProSperus works with our Client’s preferred agency and we are resource for new providers if our Clients find that their agency is struggling. But it’s important to consider the overall economic conditions when looking at their results.”