Reuters Reports Small Businesses are Turning to Collection Agencies

The Reuters news service yesterday published a story on small businesses and the collection process in continuation of reports in the mainstream press that shed some positive light on the accounts receivable management industry.

The Reuters story, “When, Why and How Small Business Turn to Collection Agencies,” is part of its Entrepreneur series targeting small- and mid-size business owners. The story by Deborah L. Cohen notes that the economic slowdown may be forcing many of these businesses to deal with past due receivables for the first time.

Cohen’s sources in the story include well-known ARM industry firms NCO Financial Systems, the strategic-consultant Kaulkin Ginsberg, and trade organization ACA International.

Kaulkin Ginsberg has projected that a recession that continues into 2009 will make recovering past due receivables increasingly difficult. In response more small and mid-size businesses are outsourcing their collection efforts, according to Kaulkin’s Mark Russell.

Cohen writes that some firms are concerned that hiring a collection agency will hurt their relationship with a customer. However, ACA’s Executive Vice President and General Counsel Rozanne Andersen notes that the stereotyped industry image of tough guy collectors is being replaced by agencies that work with debtors to craft a payment plan.

Earlier this year, the New York Times, CBS and BusinessWeek published stories that presented balanced views of the industry, focusing on the jobs created and the services offered by collection agencies, and the investment opportunities found among the publicly-traded debt purchasers.

In March, the New York Times ran a story looking at debt collection as a growing business, (“The New York Times Praises Collectors on Front Page,” March 14), and a second covering Buffalo as a center for the collection calling industry (“New York Times Strikes Another Chord for Collectors,” March 21).

CBS News ran a similar story at the end of April (“CBS News Finds Collections is a Growing Field,” May 1), and in April, BusinessWeek ran an analysis of investment opportunities among debt purchasers and collectors (“Bad Times are Good for Debt Collectors ”).

Reuters is part of Thomson Reuters, an international multimedia news agency. Kaulkin Ginsberg is the parent of insideARM.com.