The collections industry has grown insanely in the last couple of years. The reason for this is that collections and recoveries are for the most part outsourced business functions. It would not be possible for a creditor to handle retrieving debt from all of their accounts, so the creditors call the collections agencies.
But there seems to be a beginning of a paradigm shift taking place with the collections industry. The industry has grown and grown through the recession and seems mammoth. Rather than to get more service providers, creditors are beginning to reduce their number of agencies that they will work with, requiring that 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 worst workers are removed from these collection networks, certain debt collection agencies are going to lose their most important clients. Creditors will also have less reason to work with companies that have a reputation for being inappropriate. The financial effects of this will cause these companies to suffer, and company value will also fall with some owners forced to sell their companies in distress.
As this happens, the best performers will see more potential job growth, less competition, greater leverage on contract terms, better revenues, and improved profitability.
Within the debt buying market, the same type of transference is also taking place. Instead of calling on more debt buyers, some creditors are lowering the number of companies they approach for 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.
But there seems to be a beginning of a paradigm shift taking place with the collections industry. The industry has grown and grown through the recession and seems mammoth. Rather than to get more service providers, creditors are beginning to reduce their number of agencies that they will work with, requiring that 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 worst workers are removed from these collection networks, certain debt collection agencies are going to lose their most important clients. Creditors will also have less reason to work with companies that have a reputation for being inappropriate. The financial effects of this will cause these companies to suffer, and company value will also fall with some owners forced to sell their companies in distress.
As this happens, the best performers will see more potential job growth, less competition, greater leverage on contract terms, better revenues, and improved profitability.
Within the debt buying market, the same type of transference is also taking place. Instead of calling on more debt buyers, some creditors are lowering the number of companies they approach for 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.
About the Author:
Mallory Megan works for a debt collection agency. She also writes stories on business and finance, consumer spending and collection agencies.
