Collection Agency Contingency Rate Nearly 25 Percent, Kaulkin Ginsberg Survey Finds

Among findings: contingency rate healthy across all sectors, collector turn-over rate low

BETHESDA ? The average collection industry contingency rate is nearly 25 percent and collector turn-over rate is a relatively low 30 percent. These were among the findings of Kaulkin Ginsberg?s first benchmark survey of the nation?s debt collection agencies.

Kaulkin Ginsberg, which provides advisory services to organizations in the Accounts Receivables Management (ARM) and Customer Relationship Management (CRM) field, conducted the survey during Q3 2002. Kaulkin Ginsberg?s survey included collection agencies handling over $135 billion in debt across all market segments. The survey queried agency executives on many aspects of their business, such as the amount and nature of accounts placed with their firm and net fees per collector.

Survey findings include:

• The highest percentage of organizations that responded is those who collect healthcare debt, at 38 percent. General collection agencies are second at 25 percent (organizations who said they receive less than half their revenue from one debt type) and bank/credit card-focused agencies are third at 10 percent.
• Agencies have a collector turn-over rate of only 30 percent (which may include trial periods).
• Average annual net fees per collector are $119,103.
• Net fees as a percentage of gross collections are lower among larger agencies.
• Nearly 75 percent of agencies use off-the-shelf collections software rather than custom developed software.

?The relatively high contingency fee rate and low employee turnover rate show the industry to be in a period of relative strength,? said Michael Ginsberg, CEO of Kaulkin Ginsberg and frequent speaker on ARM/CRM topics. ?We believe the industry is poised for continued growth, as consumer debt continues to rise, and as more credit grantors realize the benefits of outsourcing the management of their accounts receivable earlier in the cycle.?

The complete report is available for purchase online via CollectionIndustry.com.

About Kaulkin Ginsberg
Since 1989, the Kaulkin team has provided industry-leading information, expertise, and advice to the Accounts Receivables Management/Customer Relationship Management and other business service industries. Kaulkin Ginsberg has the unique expertise and relationships that come from advising on more than 85 deals valued at more than $2 billion for a variety of family, private equity and public owners.

For more information:

Gregory M. Rose
(404) 817-0788 ext 12
grose@gelignite.net