Collection Entrepreneur Sees Opportunity with New Agency

The current economic climate may not reassure many business owners, but A.L. Summerlin sees opportunity in the downturn as he opens his third major collection agency.

In early September, Integrity Financial Partners, Inc. opened for business in a Kansas suburb of Kansas City, Mo., at a time when most entrepreneurs would keep their money to themselves and hunker down for tough times. But Summerlin has practice opening an accounts receivable management firm in questionable economic environments and he said there is nothing to fear this time around.

“When I opened Encore Receivables Management in 2000, people were saying the same thing about the economy,” Summerlin told insideARM. “There was talk of recession everywhere coming down from the tech bubble.”

Even though the economy did go through a sharp downturn immediately after Encore opened, Summerlin grew the business to include 1,500 workers in three locations. Summerlin sold Encore to Convergys in May 2004.

It was not Summerlin’s first successful debt collection venture.

He got his start in the ARM industry when he opened National Credit Services Corp. in the 1970s. Summerlin grew the operation slowly and steadily and eventually sold it in 1996 to National Revenue Corp. The company would eventually become part of NCO Group through various acquisitions.

Summerlin says that the secret to weathering an economic storm is refocusing on the core element of the debt collection business: collectors.

“You have to focus on the quality of the collections workforce,” he said. “This has worked for me for decades and it will work now.”

But Summerlin’s focus on his collectors now isn’t an empty platitude. He sees real opportunity for skilled collectors in the current economy. Summerlin believes that strapped banks and creditors will gravitate toward companies with experienced frontline ARM personnel.

“I think the real opportunity is in early-out, pre-chargeoff programs,” he said. “We’ll see a lot of work that has been farmed out overseas move back to more experienced U.S. collectors as recoveries become more challenging.” In a tricky collection environment, recovery strategies will need to shift toward leveraging collector expertise, he noted.

And Integrity is backing its collectors with unique incentive programs. The company will offer an employee stock option program that awards top performers. Rather than being vested in profits, Integrity’s plan will reward its option holders from company revenues.

At its inception, Integrity will focus on credit and bank card collections, counting creditors and debt purchasers as clients. As growth warrants, the company will move into other asset classes.

“We’ll all get through this,” said Summerlin, offering a ray of hope. “We just have to adapt as an industry like we have in the past with obstacles such as caller ID and the growth of cell phone use.”