My OperaThe Debt Collection Industry Today
Monday, June 7, 2010 8:18:10 PM
The collections industry has grown by massive proportions in the last couple of years. The reason for this is that recoveries and collections are generally outsourced business functions. It would be unfathomable for a creditor to handle retrieving debt from all of their accounts, so the creditors call the debt collection companies.
But there seems to be a beginning of an enormous change taking place with the collections industry. The industry has grown to massive proportions through the recession and seems giant. Rather than hire out more service providers, creditors are beginning to lower the number of debt collection companies that they will work with, which requires the companies they originally hired to take on more accounts.The effects of this could change the way that the collections industry operates in a large way.
As the least effective workers are removed from these collection networks, certain debt collection agencies are going to suffer losses from their most important clients. Additionally, creditors will have less reason to work with companies that have a reputation for being unethical. The financial effects of this will cause these agencies to suffer, and company value will also fall with some owners that are forced to sell their companies in distress.
As this occurs, the strongest performers will begin to see a vast amount of potential job growth, less competition, greater leverage on contract terms, improved profitability and better revenues.
Inside the debt buying market, a similar type of transference is taking place also. Instead of calling on more debt buyers, some creditors are lowering the number of companies they ask about when selling the accounts.
Smaller, less functional debt buyers will see less of a chance to purchase from these issuers. Here again, concentration within the primary debt sales market will increase. Recovery executives within credit businesses will be making the same kind of choice more and more, picking concentration within their vendor networks over diversification.
