In Your Words: The ARM Industry on the Current State of Affairs

In insideARM’s Credit & Debt Collection Industry Confidence Survey for the fourth quarter of 2008, the accounts receivable management industry made it clear that the current economic downturn is impacting their business and straining operations.

Along with the data collected in the survey, we gave survey participants an opportunity to freely express their thoughts on nearly every question. With 500 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/4th-quarter-credit-debt-collection-confidence-survey-free-report.

The responses are spread over five pages, with comments on five key issues on each page:

1. Current economic conditions and the impact on collections.
2. Collection strategies
3. Changing political climate
4. Account placement level and collection/liquidation rates
5. Staffing plans

Question: Please share any additional perspectives on current economic conditions and the confidence you have to perform going forward.

“We are in the wireless business and people have become increasingly dependent on their cell phones; often times replacing their home phone with a cell phone. While our sub growth has been slower than we’d like, our collections has only felt a minimal impact at this point as far as write off amounts. We are seeing more requests for payment arrangements and extension on payment due dates.”

“I think margins will shrink somewhat but if we keep our attitude positive and our expenses in line we will make it through the tough times.”

“Some individuals within our industry are themselves trying to destroy the American Debt Collections industry and further downgrade the American Economy by attempting to move the entire industry to India. Again, the greed of a few putting the screws to the rest of the population. If America continues to allow these acts to occur then we will continue to see American economy get weaker and weaker as time marches on.”

“Like the rest of the world, I am waiting to view the first 100 days…”

“Several of my competitors and I are ready to get out of this business because we cannot make any money in it.”

“I suspect we will not see a lot of voluntary payers, but if they have an asset, a lawsuit will reorient their priorities through garnishment. We have noted, in the past 6 months, that our garn level has increased substantially and we expect that trend to continue.”

“Next 6 months are going to be really difficult. Hoping to see improvement late 3rd qtr to 4th qtr. Upside right now is refinance, which had all but disappeared for the last 12 months. Price of gas is also positive. In the long run, I’d rather have 10% of the population unable to pay (unemployment) than 100% impacted by $4 a gallon gas.”

“We have the confidence that in the future we will survive and grow while others will wither and die. The dedicated will succeed. The status quo will fail.”

“Clients are not paying us our commissions in a timely manner, no matter what the contract says about remitting to us. Clients that are net have tried to change to gross, which would mean a delay in payment of commissions. This is a serious problem, and we have to be alert for possible bankruptcy on part of clients.”

“Very negative on next 24 months. Stimulus package has significant headwind from global recession. Banking system will need quasi-nationalization to address credit crunch.”

“Consumers are in a pay down debt mode. As long as unemployment doesn’t skyrocket, this national trend will help our company.”

“As a debt buyer, we are seeing sellers refusing to lower their price expectations and subsequently they are withdrawing from the sales market. They may be warehousing or using internal or contingency more heavily….makes it tougher on debt buyers who are working older more expensively purchased debt in a tougher collection environment without the opportunity to buy less expensive debt to help offset these challenges.”

“12-16 hard months. Recovery will be slower than most economists predict.”

“Very poor conditions due to Democrats in control of nation. Pro Debtor laws will be passed.”

“I believe that the new administration will provide a sense of hope for the people of the nation, especially after the Bush administration dug such a large hole.”

“Consumers that can pay, will ~ the collector that knows how to identify that consumer and work with her/him will succeed.”

“Tough times are when the Good and Bad get separated out. Companies with good practices will feel the pinch but will also survive better than the unethical companies. Once the downward trend reverses, the good companies will see a higher increase in their market share.”

“The housing market is vital to our industry and until it becomes stable, the ARM Industry will be up and down.”

“Simply put you must start to collect monies just like we did before the mid 90"s when we became mortgage and settlement specialists. PPA, series of post dated checks and getting the debtor committed and paying is the name of the game now!!”

“We hope the government has no interference with the ARM industry like we are going to see in the mortgage industry.”