Free Report: Evolution of the U.S. Accounts Receivable Management Industry
Download this Free Report and Learn:
- How the accounts receivable industry has evolved, from the growth of the “mom and pop shop” to the sizable companies that compete in the debt collection industry today
- How accounts receivable management companies have come to depend more on the business systems and processes that allow them to function and grow as a whole
- The impact of the Fair Debt Collection Practices Act (FDCPA) on the debt collection industry and the FDCPA's role in increasing consumer rights
- What business models, client expectations, and technology platforms have contributed to the development of the accounts receivable management and debt collection industries
Evolution of the U.S. Accounts Receivable Management Industry
Trends Shaping the Accounts Receivable Industry
The stereotypical company in the accounts receivable management industry has changed. And for good reason. Success in this industry can no longer be created with a spare bedroom and an extra telephone line. In today’s accounts receivable industry, modern call centers house technology-enabled debt collection operations with considerable economies of scale. As a result, this industry attracts the interest of Wall Street, strategic acquirers, and private equity firms alike. The history of the accounts receivable management industry provides some insight into how this change took place. It can be traced largely to the growth of consumer credit in the United States as well as the country’s economy as a whole.
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The History of Consumer Credit in the United States
The early U.S. economy was largely agricultural, and the barter system that is part of life on a farm gave rise to the earliest forms of debt collection in the U.S. Farmers frequently paid for goods and services based on credit, settling those debts at harvest time. Lenders acquired farmers’ assets during years in which crops were not plentiful enough to repay obligations. In this way, debt collection became a legal process resolved in courthouses around the country.
Download The Evolution of the U.S. Accounts Receivable Management Industry and learn about the critical steps in credit history:
- The advent of the industrial age and its implications to accounts receivable
- The origins of the first charge card for consumers in the 1950s
- The beginnings of a nationwide credit and industry
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Early Debt Collection
Small debt collection agencies proliferated throughout the United States in the 1920’s and 1930’s. When creditors could not collect account balances on installments plans or retail accounts, small companies were hired to collect the debt.
Download The Evolution of the U.S. Accounts Receivable Management Industry and discover more about the history of early debt collection, including:
- How familiar names in the modern accounts receivable industry got their start during this period, including NCO Group in 1926 and the American Collectors Association in 1939
- How debt collection was performed with less technology than today
- Why the pressures of this revenue model and the inefficiencies of existing infrastructure led debt collection agencies to base their success almost entirely on the discretion of debt collectors
- How the FDCPA shaped the accounts receivable industry upon its arrival in 1977
The Accounts Receivable Industry Evolves
Download The Evolution of the U.S. Accounts Receivable Management Industry and discover how:
- The FDCPA ushered in a new era for the accounts receivable industry by regulating the way in which debt collection occurred. Among its many provisions, the FDCPA established guidelines on how, when, and where a debt collector can contact a debtor. The law also required specific notice and disclosure requirements that accounts receivable industry professionals had to follow during debt collection. Consumers could also sue debt collection agencies for illegal tactics such as threatening violence to a debtor or harassing a debtor’s friends, relatives, or employer.
- Advances in supervision on the collection floor, telephone systems, and early collection technologies allowed debt collection agency managers to improve financial and operational results by managing their companies as systems, rather than as groups of collection agents.
- Debt buying traces its roots to the isolated retail stores in the 1960s and the bankruptcy courts of the late 1970s. A number of today’s most prominent debt buying companies can trace their lineage to these portfolio sales, which not only increased the supply of paper but signaled the government’s endorsement of this new business activity.
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The Modern Accounts Receivable Industry
Larger accounts receivable companies hardly resembled their predecessors. Collection supervisors actively monitored the collection floor. Debt collection software packages automated aspects of the collection process. Debt collection letters were based on templates developed for the company as a whole and reviewed by counsel. Other debt collection technologies such as skiptracing and redictive dialing grew more sophisticated and popular, allowing debt collectors to spend more time speaking with debtors. More recently, developments in portfolio scoring and related forecasting models brought heightened sophistication to the financial management of accounts receivable firms. With technology platforms in place, companies have turned to acquisition as a growth strategy.
Download The Evolution of the U.S. Accounts Receivable Management Industry and learn more about how the accounts receivable industry has changed through its history.