A Turbulent Year for the Accounts Receivable Management Industry

In 2008, the Accounts Receivable Management industry saw many highs and lows, as foretold at the beginning of the year (“ARM Industry in for a Wild Ride in 2008,” Jan. 8, 2008; “The State of the Industry: What is Next for ARM?,” Jan. 29, 2008). A poor economy and labor market led to slow collections, while more work was being thrown at collectors:

• “Mortgage Payments Could Make Credit Card Balances Soar,” July 15
• “Credit Card Charge-Offs Could be the Economy’s Next Big Drag,” Oct. 6
• “Auto Loan Delinquencies Could Rise 33 Percent,” April 22

An increase in work and a marked slowdown in collection and recovery rates led to a heightened sense of apprehension in the ARM industry. To gauge this, insideARM launched a quarterly ARM Industry Confidence Survey in the second quarter of 2008. The survey proved to be not only very telling, but it was one of the most popular content items on the site all year.

• “Collectors Feeling Economic Pinch, But Optimistic on Future,” May 22
• “Collection Agencies Shifting Strategies in Rough Economy: Survey,” Nov. 19

Despite the troubles experienced by many in the industry, or perhaps because of them, merger and acquisition activity was robust in 2008. This past year saw one of the most significant transactions ever in the industry when NCO Group, the largest ARM firm in the U.S., completed the acquisition of Outsourcing Solutions, Inc. (OSI), the second-largest (“NCO Group Completes Acquisition of OSI,” March 3).

There were also other significant deals in the latter part of the year, even in the face of frozen capital markets:

• “Sallie Mae ARM Unit Posts Loss, Sells Int’l Debt Buying Operation,” Oct. 29
• “United Recovery Systems Acquired by Private Equity Group,” Dec. 24

As usual, the legal and regulatory environment played a large role in the collection industry. Early in the year, the FCC handed down an advisory opinion on collectors’ use of autodialers when calling cell numbers ("FCC: Collectors May Call Cell Phones with Autodialers, Prerecorded Messages,” Jan. 7, 2008). The story had an interesting bookend for the year when a court case dismissal at the end of the year upheld the FCC’s position (“Case Dismissal Upholds FCC Declaratory Ruling on Cell Phone Use in Collections,” Dec. 22. But yet again, courts proved that the onerous “Catch 22” that collectors face in using automated messaging vs. adhering to third-party disclosure protections is acceptable as the law of the land (“Legal Ruling Further Muddies Waters on Third-Party Disclosure vs. Mini-Miranda,” Dec. 12).

The FTC turned its regulatory sights on the debt settlement industry in 2008, an industry that has been at odds with the ARM industry over the years (“Debt Settlement Companies Put Under FTC Microscope," Sept. 29). This prompted a series of well-received articles on insideARM:

• “Debt Settlement Companies Largely Ignored by Banks,” Nov. 3
• “Collection Agencies Wary of Debt Settlement Firms, But See their Purpose,” Nov. 13
• “Unrealistic Collection Expectations Drive Consumers to Debt Settlement,” Nov. 20

But for all of the bad news and legal ramblings, the most popular story on insideARM this year was a positive one. This year, we launched the first-ever Best Places to Work in Collections recognition program, in conjunction with the Best Companies Group. insideARM identified the 25 best employers in the ARM industry in December (“insideARM Announces 2008 Best Places to Work in Collections,” Dec. 4). Full ranking results will be posted in February, but interest was very high for the list of the top ARM firms.