With the Economy Still on Life Support, How are Your Recoveries?
Economic results are out for July and the results are mixed at best. Consider the following updates:- The unemployment rate slid from 9.5% to 9.4% prompting the Federal Reserve to voice optimism that the long decline of the US economy appears to have ended.
- The housing market is still slow, with a record number of foreclosure filings posted in July.
- Retail sales fell in July after two straight months of gains. Without car sales from the "Cash for Clunkers" program, the numbers would have been even worse.
- Wages have fallen from last year’s levels, although fewer major U.S. employers are planning additional layoffs.
I could go on but you get the idea. In the ARM industry, agencies and credit grantors continue to experience lower liquidation rates compared to last year’s results generally across all asset classes and all stages of delinquency. Placement volumes are up. Those servicing later stage, lower balance and/or community accounts (i.e. healthcare, utility, and local government) are typically experiencing better liquidation results compared to those working fresh accounts, higher average balance accounts where recoveries are off anywhere from 30-60%.
I am afraid that we have not turned the corner on economic recovery yet and until consumer confidence and unemployment rates improve consistently for an extended period of time, the recession will continue to negatively impact recovery rates.
How are current trends affecting your recovery efforts? Agency and recovery managers, please share your experiences by commenting to this blog. What types of accounts are you servicing? How are your placement volumes and recovery rates? What creative techniques are you utilizing to improve your performance levels?
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Comments
Comment from Anonymous on August 14, 2009 at 10:52PM EST
Everyone in our agency is being squeezed more than usual. Collectors can't possibly make more calls per day or take more incoming calls.
The real dilema seems to be that we truly need a larger work staff to cover all the accounts and calls that are flooding our queues.
Of course the profit margin isn't increasing as quickly as the number of accounts and we pride ourselves on thoroughly working our accounts so it creates a tailspin in upper management which trickles down.
There's a danger of losing good collectors who are still bringing in alot of money but are frequently reminded that it's not enough.
Comment from KDS on August 15, 2009 at 12:43PM EST
We have taken serious measures over the last 9 months to improve our performance for clients by working "smarter not harder". We have lost faith in the Recovery Scores we were purchasing from one of the major bureaus since we were not seeing the results that we had been experiencing in the past. We investigated other tools in the market and partnered with a company in Scottsdale AZ called Impact Data. This company has created a segmentation model that quickly identifies the segments of our existing inventory and new placements that have the highest propensity to pay and has allowed us to build strategies that allocate our resources much more effectively. We have seen continued increases in our operating margins month over month and have been improving our market share position with our clients. Companies that continue to just do what they have been doing for the last several years are being leapfrogged by our company because of simple outside of the box thinking.
Comment from John Rousseau on August 17, 2009 at 10:57PM EST
As a collection consultant, I too have tested Impact Data with collection businesses I am now working with to achieve or improve profitability of my client(s). If anyone is interested in discussing my experience with Impact Data, please contact me as I will reveal any generic results I have produced using ID data. I will also be at the 2009 DCS Puerto Rico conference 9/15-17.
John Rousseau collectionguru@gmail.com 602.843.7137 pob. 480.747.1586 mob.