This article was submitted by Jessica Hartman, IACC Executive Director

Jessica Hartmann

Jessica Hartmann

Those in commercial credit, collections and related industries will face significant economic and regulatory challenges in 2016, International Association of Commercial Collectors experts predict.

Credit will remain tight, and creditors will be looking to save money and to get more services and assurances for the money they do spend. Are there any opportunities for commercial collection agencies to grow in such a climate? The IACC Board of Director’s Executive Committee – all highly experienced commercial collection agency executives – shared their insights and predictions during a December planning session.

More on the Big Picture: The Global and U.S. Economies

“Worldwide, economic growth will stay flat, or be slightly negative,” said IACC President Tom Brenan, who is also president of Altus GTS in Kenner, LA. Credit-grantors and other business executives will proceed cautiously in light of the usual uncertainty that accompanies U.S. presidential elections, on-going international wars and the threat of terrorism both here and abroad.

“These circumstances impact the consumer mentality, and that drives overall business,” said Paul Eisenberg, IACC Treasurer and Chief Operating Officer at Johnson, Morgan & White in Boca Raton.

“The threat of terrorism will have an impact not just on consumer travel internationally, but on commercial business overseas,” added Greg Cohen, IACC President Elect and President and CEO at Caine & Weiner in Woodland Hills, CA.  Companies are already evaluating whether they should send their employees abroad, Cohen said.  “While some work can be done via the Internet and other technology, this is still likely to have a chilling effect on international business.”

Commercial Creditors’ Expectations to Rise 

“Credit is going to continue to be fairly tight in 2016, with uncertainty still looming about the economy, forcing credit managers to play it close to the vest,” said IACC Past President Lee VandenHeuvel, President of Ross, Stuart & Dawson, Inc. in Auburn Hills, MI.

In this climate of slow growth and cautious spending, creditors will demand more services for the money they spend, Brenan said. They will also hold collection agencies to higher standards, making affiliation with a professional association known for holding its members to high standards – such as the IACC – even more valuable, he said.

  • Credit managers have increasingly earned professional designations through the National Association of Credit Managers and the Credit Research Foundation. As a result, more CMs will oversee credit departments with written credit approval and monitoring policies and an escalation protocol for delinquent accounts.
  • The above, coupled with the flat or stagnant economy, means the delinquency rate and number of accounts placed for collection will be reduced. (But it also means the liquidation rates for collection agencies will increase, as the quality of the debtors improves.)
  • Creditors will become more interested in the credentials of the agencies they hire and will require that agencies are certified, licensed, bonded, insured and carry internal control certifications. Clients will also demand more transparency, electronic communications and payments.
  • Larger companies that have previously decentralized their credit function with multiple credit managers operating autonomously throughout the geography they serve will tend to centralize the credit function. This will increase company control over their credit strategy.  It will also increase their negotiating power with collection agencies. Instead of multiple credit managers contracting with third-party agencies they select in their region, a centralized shared services credit management function will put out an RFP to hire fewer agencies that handle more accounts and serve a bigger, if not national, geographic region.

Some Collection Agencies Won’t Outlast 2016’s Pressures. Those That Survive Can Thrive

Customers will demand more of collection agencies, and it’s likely the government will, too, in the form of increasing regulation. “Agencies will be challenged to meet the clients’ expanding requirements, and by the increased costs in meeting these new requirements,” Brenan said.  “The number of total agencies will shrink, with smaller ones falling by the wayside,” said VandenHeuvel. “There will be more mergers and acquisitions.”

The brightest spot: Commercial collection agencies can grow in the coming year by courting international clients in need of U.S. collections and international and domestic businesses looking to outsource first-party collections.

  • Placements from clients should continue to increase at a 2-5% annual rate which coincides with most of the world GDP. “Tight credit means less money flowing to borrowers, which results in fewer claims being placed with agencies,” VandenHeuvel said.
  • Consumer regulations will bleed over into the commercial world, continuing to blur the line between consumer and commercial regulations. This means agencies will spend more money to be compliant.
  • Remember the discussion on centralized credit function leading to the hiring of fewer third-party collection agencies through an RFP process above? The RFP process gives the credit-granting company the power to require reduced rates and to more carefully vet the agencies considered for licensing, certifications, bonding, insurance and services. All of this will squeeze the smaller agencies and bring on a consolidation in the commercial collection space.
    • English is becoming the language of business around the world, and more international companies will go directly to U.S. companies to collect export debt in other countries, and will send their U.S. debtors directly to North American collection agencies.  “I see that as being a trend,” Brenan said.  International businesses will be more likely to hire North American agencies than those from other English-speaking countries because offshore collectors are not familiar with local laws nor are they trained to handle commercial accounts, he said. Businesses will continue to use offshore collectors for consumer accounts, however.
    • Slow growth and economic and political uncertainty will lead businesses, including commercial creditors, to seek ways to save money. As a result, many creditors will be more open than ever before to outsourcing all receivables to an outside agency. “If there is a real growth opportunity in commercial sector, it is probably on first-party outsourcing,” said Cohen.

Overall IACC 2016 Forecast: Challenges for All, Opportunities for Some

To sum up the IACC Executive Committee’s engaging discussion on the coming year: The realities of doing business in a slow-growing economy, where consumer and therefore businesses’ willingness to spend is further hampered by current events, mean commercial credit managers will be issuing less credit. They and their companies will be looking for ways to save money and will spend what they must with considerable caution. All of that means they will be demanding more services, and more proof of quality, from their commercial collectors – and will negotiate for the best pricing.

In addition to these demands from clients, commercial collection agencies will also feel increased regulatory pressure. It’s going to cost more to be compliant.  Some commercial collection agencies, particularly the small ones, will join forces through mergers and acquisitions. Others will fold. Those that survive will find opportunity in collecting debts owed to companies located outside the United States and in providing first-party collection services for both international and domestic companies looking to save money via outsourcing that function.

Share your thoughts on IACC’s 2016 predictions, and tell us what you see coming in the new year, via LinkedIn. Join the discussion at

About the International Association of Commercial Collectors (IACC)

With members throughout the U.S. and in 25 other countries, IACC is the largest organization of commercial collection specialists in the world. IACC contributes to the growth and profitability of its members by delivering essential educational and professional tools and services in a highly collaborative and participatory environment. For more information, visit

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