Banks Show Sliding Confidence on Collection Prospects, But Expect Rebound: Survey

The ongoing credit crunch and the resulting Wall Street fallout will have an impact on credit granting businesses, according to the survey.

Survey respondents were also given the opportunity to express their thoughts in a less structured way at the end of the questionnaire with an open-ended free response. One participant took the opportunity to explain the credit crunch on banks: “Unless credit thaws significantly, we will continue to see a very large number of ‘overnight’ business failures as maturities come due and are not renewed. This issue will have a significant impact as these risks are not foreseeable in corporate customers via traditional risk management indicators.”

While creditors felt that their own recovery performance would get better over time, they did not have the same opinion when it came to their collection agency vendors.

Of all the questions on the survey, the ones predicting collection performance six months and 12 months down the road showed the largest variation between bank and creditor respondents and collection agency respondents. Banks had a much gloomier outlook on future performance compared to collection agencies. Download the full survey results to see how much they differed.

More than 75 percent of creditors taking the survey said that they outsourced at least some part of their collections to third party agencies.

Editor’s Note: Kaulkin Ginsberg is the parent company of insideARM.com.