Debt collection agencies saw earnings decline in 2012 compared to the previous two years, according to a financial benchmark report from

Earnings before interest, taxes, depreciation, and amortization (EBITDA) as a percentage of revenues was lower for each of the eight company size categories in the report except the very smallest, agencies with under $500,000 in annual revenue.

Not only was EBITDA down from 2011 to 2012, but the metric also fell well below EBITDA percentages for 2010. EBITDA is widely used as a measure of operational profitability for a company.

The Collection Agency Financial Benchmark Report 2013 draws information from a variety of public and private-sector sources, and aggregates data from 2,370 collection agencies. Results are reported among eight company-size categories, from agencies with less than $500,000 in revenues to those with revenue up to $100 million annually. The data in the report is from the full year 2012.

3yr-ebitda-revenue-2m-5m-SMALLThe graph at right shows the typical breakdown of EBITDA as a percentage of revenue over the past three years. This graph, which is included in the report, shows results for agencies with between $2.5 million and $5 million in annual revenue. EBITDA increased slightly from 2010 to 2011 and then sharply dropped off last year.

Graphs for other company sizes, also in the report, show a very similar pattern, except for agencies with less than $500,000 in revenue: they showed a very slight uptick in EBITDA in 2012.

The most likely culprit was increased expenses. As shown in other data in the report, operating expenses as a percentage of revenue soared in 2012 across most company sizes.

When the data is presented in real dollars, however, operating expenses were relatively flat. The real problem was a decline in revenue in 2012. Real revenue across most business sizes in 2012 was below the five-year average (2008-2012).

Blame the decline in revenue on persistently high unemployment, a nightmarish regulatory environment for both creditors and collectors, or on any other factor; it still appears that most ARM companies had less coming in last year.

For more financial results, check out the Collection Agency Financial Benchmark Report 2013 in the Research Library.


Next Article: 7 Tasks Your Revenue Cycle Could Be ...