ARM Business Planning for 2007

It’s the beginning of the year in the accounts receivable management (ARM) industry, a time for fresh starts.  For the companies whose fiscal years track calendar years, the books for 2006 have been closed, and we’ve been able to evaluate our success in the prior year.  Sights turn to the coming year and our prospects for improving performance.  Enter the business plan.

Business planning is part art and part science.  How is this process most effective in the ARM industry?  It depends on the company doing the planning.  Let’s take a look at a few cases.

Company A is a healthcare collection agency generating roughly $4 million in revenues, most of which is derived from servicing two hospitals in its surrounding area.  Placements have been steady through 2006 and the agency would like to grow organically by serving its existing clients, and perhaps receiving more placements from these clients as well.

This company may not need much in way of business planning in order to have a successful year in 2007.  If owners and managers simply seek organic growth serving existing clients, executing well in the company year may be sufficient.  While this company’s plans for the year may not be ambitious, these plans need not be restated in an extensive business plan for the company to meet its goals.

Company B is a contingency collection agency generating roughly $15 million in revenues from secondary credit card placements.  Margins have been squeezed in 2006 as the agency has received more placements from debt buyers and fewer placements from original credit issuers.  The company has considered purchasing debt but lacks the capital and expertise to do so in scale.