In Your Words: Comments from the ARM Industry Confidence Survey

In insideARM’s Credit & Debt Collection Industry Confidence Survey for the first quarter of 2009, the accounts receivable management industry made it clear that the current economic downturn is still impacting their business and straining operations, even as the first quarter brought an uptick in performance.

Along with the data collected in the survey, we gave survey participants an opportunity to freely express their thoughts on many questions. With 564 participants in the survey, we received a lot of comments on current conditions, plans for strategy changes and many other topics.

Below is a comprehensive representation of the comments we received. To view the data collected in the survey, please visit http://www.insidearm.com/go/credit-debt-collection-confidence-survey-q1-2009-free-report.

The responses are spread over several pages, with comments on five key themes:

Collection & Liquidation Rates and Account Placement Volumes for ARM Companies
Collection Strategy Changes at ARM Companies
Staffing Levels and Strategies atARM Companies
Collection Performance of Creditors
General Comments from ARM Companes, Creditors, and Vendors to the ARM Industry

Collection/Liquidation Rates and Account Placement Volume – ARM Companies

“We perform extremely well and we are accumulating higher and higher quality business.”

“As a tax collection agency, we have seen significant growth in new receivables as taxpayers take longer to pay or do not attach a payment with their tax return. Collectors hear of more hardship cases and are taking more installment agreements as people are unable to pay the full amount due in one payment. I expect to see this trend continue in the coming months. Hopefully, the economy will turn around and job loss will be minimized.”

“More placements but harder to collect.”

“My rates are very competitive, but clients are seeking a bargain basement rate, other words a lot of potential clients are similar to many employer these days, penny wise and pound foolish.”

“Our rates are well below what they were 5 years ago however our volume is up over 200 percent for that period. Bottom line: we are working harder for the same profits.”

“Placements are up and collections down because the customers we collect from just don’t have funds.”

“Although liquidity is down from the same quarter a year ago, profitability is up due to cost cutting measures that were begun in early 4th quarter ’08.”

“Rates slowed in 4th Q of 2008 and 1st Q of 2009. Seem to be picking up now.”

“Dipping just a little but placements have doubled and now we are picking and choosing which clients and the fees we charge are being increased as well.”

“Medical wants lower rates. Age of accounts increasing.”

“Placements are increasing, hence – expenses are going up – but recovery is down, causing layoffs because of lack of revenue – but when we need man-hours available the most. I foresee small collection agencies going out of business and large agencies remaining to charge any rates they want.”

“Most businesses in the area have stopped extending credit to consumers and businesses, which adds insult to the economic situation. The collection levels are single digits!”

“There is no way that attorneys in my area will accept cases at 13% or the other ridiculous amts that were being offered. Now that it is back to normal, cases are coming again.”

“With freshly charged off account liquidation rates down anywhere from 20% – 50% (asset class specific), fee rates from Creditors must go up, or agencies will continue to place less resources, thus compounding the problem long term for both the credit grantor, and the agency.”

“Collection rates are relative to an agency’s ability to be dynamic as the economy changes.”

“Has been decreasing since May 08 but did see an “uptick” in the 1st qtr 09.”

“Lots of debt harder to collect. This is the new level of the economy, everyone needs to adjust to it.”

“Right party contacts are slightly up and the debtors ability to pay is down.”

“Down 40-45%”

“A larger portion of our placement growth is derived more from Marketing rather than our clients writeoff increasing.”

“We have more business than we can handle. Liquidation rates are down but business opportunity is unlimited.”

“Account charge off’s from banks are definitely up however the number of debtors paying is down as is the average monthly payment. We are seeing a great increase in low dollar settlement requests.”

“Experiencing a 30 to 35 % drop in over all recoveries. Nothing that we have implemented to date has had any effect on recoveries.”

“In northern Europe, the crisis has not sunk in yet. Debt buyers appear surprised to hear that things are developing so negatively in the US and so sudden.”

“The bulk of our business is in 4 states. Kansas, Missouri and Oklahoma are hurting with the recession. Texas is business as usual. I read where 7 out of every 10 new jobs in the U.S. are located in Texas.”

“Collection rates have dropped 1-3 months out. Seen more payment arrangements and building up of PPA type files than the normal BIF and SIF arrangements.”

“Inventory is up and liquidation rates are down. We need to put in more work effort to get the same or nearly the same results of 12 months ago. This decreases unit profitability.”

“Rates will increase with the resistance to ability to collect. Supervisors will be more work active. We will have more self motivated and experienced workers.”

“Liquidity rates have dropped significantly year over year from 2008 to 2009.”

“More placements but about 25-30% less in liquidation.”

“Economy factors are still hindering optimum collections but have brought about progressive enhancements to the collection processes.”

“It’s harder and takes longer to collect.”

“Rates have remained constant and I don’t foresee any pressure to decrease.”

“Delinquency rates on payment plans are up significantly, plenty of paper out there to purchase.”

“My business is recovery of bad checks and check verification services. All my retailers have sales slumps. There are no new business ventures here in Michigan, and those that are surviving are not taking on any new services.”

“Collection rates are approx 10-15% lower – placements 15-20% higher.”

“Lots more lawsuits to effective post judgment collection rather than voluntary payments.”

“Placements are high and collections are starting to pick up.”

“Due to AB774 we have seen a change in our average balance but in turn we have seen an increase in our collection %.”