Accounts Receivable Management

Debt collection has been an integral part of the U.S. economy since the time that consumers and businesses first paid for goods and services on credit.  While the early forms of debt collection were legal in nature and resolved in a courtroom, small collection agencies sprouted up across the country as installment plans and retail accounts became more common. Original bill collectors were called “door knockers” because they went door-to-door to collect debts. This form of debt collection disappeared in 1977 with the establishment of the Fair Debt Collection Practices Act (FDCPA), which regulated how, when and where a collector can contact a debtor and mandated specific notice and disclosure requirements. As a result, collection agencies incorporated letters, phone calls and legal collection efforts into their liquidation strategies instead of door-to-door efforts.

While this transition was challenging, the ARM industry was ultimately reshaped for the better.  As our credit economy grew, collection agencies were forced to improve their business processes. Advancements in technology helped to support dramatic increases in new business and the new collection strategies enabled collection agencies to improve their financial and operational results while adhering to the federal and state regulations. Collection agencies expanded their service offerings to better meet their clients’ needs and respond to changing market economic/market conditions, including offering pre-collect courtesy calls and portfolio acquisitions services.  

Today, the ARM industry has become a global solution, comprised of small, mid-market and large companies that offer four primary services for commercial and consumer credit grantors as well as federal, state and local government agencies:

Third Party Collections – Otherwise known as contingency collections, this service is provided by collection agencies who contact a debtor on behalf of a client under the name of the agency. Third party agencies are paid a contingency fee, or a percentage of the amount collected.  Consumer agencies need to be properly licensed and bonded, and adhere to the FDCPA.

First Party Collections – This service is provided by collection agencies or outsourced call center companies, who contact debtors on behalf of a client under the name of the client. The callers are very courteous and focused on maintaining the client relationship. The client usually pays the agency under a fee-for-service arrangement, although some engagements have a contingency fee component.

Legal Collections – This service is provided by law firms, and may or may not involve legal action. Typically, a law firm will send the debtor a letter acknowledging they are representing the client and explaining that further legal action may be taken if the debtor does not resolve the outstanding debt.

Debt Purchasing – This service is provided by debt purchasing companies who acquire portfolios of delinquent or charged-off accounts from credit issuers. This service has been in existence since the 1960s, but became more popular in the 1980s when the Resolution Trust Corporation (RTC) sold large portfolios of delinquent debt to fund the government’s bailout of failed savings and loans.

While the ARM industry continues to evolve, Kaulkin Ginsberg is available to advise  those ARM companies who are committed to maximizing  their growth and exit objectives, as we have been since 1991.

Financial Asset Management sale to American Capital Strategies (NASDAQ: ACAS).

West Corp‘s (NASDAQ: WSTC) strategy to enter the ARM industry, resulting in the acquisition of Attention, LLC.

United Recovery Systems acquired by Audax Group

United Recovery Systems, L.P., a debt collection agency specializing in bank card / credit card contingency collections, was acquired by Audax Group, a private equity group providing investment capital for middle market companies.






Podcast: What the ED Contract Delay Means for ARM

October 24, 2016

The wait for the U.S. Department of Education's unrestricted contract drags on. Kaulkin Ginsberg speculated in a recent blog that ED would make awards at the end of their fiscal year on September 30th, but that day came and went without any updates. However, just last week ED announced they now intend to grant contracts by the end of calendar year 2016, ext ....
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Private Equity Buyers and Investors: An alternative exit strategy

October 19, 2016

Selling a business is typically considered an owner's ultimate exit strategy. However, there are a number of factors that need to be considered before taking this step, and perhaps the most important - money aside - is the effect a sale will have on your lifestyle. Although playing golf every ....
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Podcast: The U.S. Dept. of Treasury Contract

October 13, 2016

At midnight on Thursday, October 13, proposals are due from collection agencies for the milestone U.S. Department of Treasury contract to collect non-tax debt. Mike Ginsberg conducted an informative discussion with federal contract expert Randy Kamm about the significance of this contract, the potential for new business in the ARM industry, and what participants should expect from this procurement process. This podcast is a product of KG Prime, Kaulkin Gins ....
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NARCA 2016 Fall Conference

The Cosmopolitan
Las Vegas, NV
October 26th-29th, 2016

NARCA conferences provide a forum to attend cutting-edge educational sessions, earn CLE credits, attend client meetings, and network with professionals from creditors rights law firms, clients and credit grantors, buyers and sellers of consumer debt, and vendors of innovative products and services. NARCA conferences generally attract more ....

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DBA International's 20th Annual Conference

ARIA Resort and Casino
Las Vegas, NV
February 7th-9th, 2017

The premier industry event celebrates its 20th anniversary! DBA International is in full gear making preparations for its 20th Annual Conference. It's one of the most well-attended events in the industry, attracting more than 1,100 participants. The event provides abundant ....

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Collection and Recovery Solutions 2017

Four Seasons Hotel
Las Vegas, NV
May 10th-12th, 2017

This content rich educational conference gives the techniques, strategies and resources for maximizing collection and recovery outcomes. Our goal is to enrich the intensity of the conference for the exhibitor, attendee and sponsor alike with an unparalleled learning experience. This is an exclusive gathering ....

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