The recovery executives within credit issuing companies whom we’ve spoken to recently report degradation in liquidation performance, both between April and May of this year, and between May 2008 and May 2009. And while these reports are anecdotal, they give us reason to believe that the much-anticipated turnaround in collectability has yet to arrive.
Coming out of tax season, some dip in performance is to be expected. Not only were tax refunds behind us, but May itself had fewer collection days available to recovery executives and collection agencies, with the Memorial Day holiday shortening the number of collector hours per month. Still, with liquidation performance already low in May of 2008 as the recession deepened, some year over year improvements would have been welcomed by all.
Underlying these disappointing trends is the key barometer in the world of receivables management, the unemployment rate. In May, the unemployment rate reached 9.4 percent, its highest point in 26 years. That rate increases to 16.4 percent when it includes discouraged workers and part-time workers who would prefer full-time jobs. Simply put, recovery figures are unlikely to improve as long as unemployment and underemployment continue to rise.
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