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The Changing Landscape of Commercial Collectors

ingold bobI started in this field in 1979, those were known as the glory years. Plenty of business and all creditors wanted was money collected and manual written reports explaining circumstances of the debtor. We would spend Monday through Thursday calling customers and Friday reporting on our portfolio. As for legal accounts, costs were small, credit managers would invest years trying to collect $1,200 through the legal system. Rates were non-negotiable. 25/20 was the norm and usually 50% for small balances. As for legal matters, the Commercial Law League Rates were the gold standard. Very seldom did a client ask for rate reduction and 10% non-contingent suit fees were the norm. How things have changed.

1) Rates – In the ‘90s they became fair game to all agencies and rates as low as single digits were being offered on request for proposals. Margins were cut razor thin.

2) Technology took over – Collection systems meant to drive activity, dialer programs, statistical data that was never available became the standard. Email reporting and instant cash through ACH, etc., became the norm. Suddenly, creditors wanted and received instant information. Online access went one step further allowing creditors real-time access on their accounts.

3) While balances climbed steadily, the cost to sue went up even faster. Clients were less likely to invest in litigation on the medium-size balances. At the same time, technology allowed attorneys to handle the entire state shrinking the competition and availability of attorneys.

4) The recession of 2008 shrank the collection opportunities and many creditors learned to manage without the “sell at all odds” mentality that existed prior to that. Credit cards, shortened distribution times and on-line purchasing have changed the commercial collection industry drastically.

5) The above factors caused consolidation of many agencies and put further pressure on rates.

So how do we cope in 2018? By hiring remote employees, training, measuring results and retention.

Hiring

With the full employment market of this time and competition for the best and brightest, hiring has become a true challenge. Technology has shown us the answer – remote hiring. With on-line access, VoIP phones, etc., remote employment is a way to hire the best. No longer is access to the office essential. Employees can work in any location and feel as close as the next office over. Some considerations must be explored – are they a self starter? Do they have Internet access? At CCC of NY, 25% of our staff operates remotely and are measured by the same standards as working in the office. The same qualities are required for hire whether in the office or remote.

Training

It is important to train your staff. International Association of Commercial Collectors Inc. has an excellent commercial collection training program which all our collectors are required to complete in addition to FDCPA training and email literacy. CCC of NY has introduced a CCC University and all employees are reviewed for skill upgrades including collectors. On-site webinars and trade organizations are excellent resources.

Measure

Success is only determined by results. Measuring how many calls, how long on the phone, how many priority payments, how much money collected and what fees earned are just some of the numbers to be looked at. There is an expression: train up or train out. Formal training and measurements of performance lead to this conclusion.

Retention

The key to a successful collection department is employee retention. So much of what we do is relationship management and continuity is important. Some ideas on retention are fair bonus structure and opportunity for promotion and recognition. This could be an entire article unto itself.

Our industry has changed drastically over the past 25 years and the companies willing to change with it have been successful. Companies like ABC-Amega, Caine & Weiner and CCC of NY have continually reinvented themselves and thrive in an era of change.


Bob Ingold is the CEO of Commercial Collection Corp of NY Inc, a commercial ARM company. He has served on board of governors for CLLA and is a past president of the IACC.