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.

 

 

 

 

LATEST BLOGS

It Takes Two to Tango. Maybe Three.

November 20, 2014

We recently learned how the Feds busted up a crime ring involving debt collectors.

According to the press announcement, the Justice Department and the FBI arrested seven offenders for their roles in a fraudulent debt collection operation that, over the course of five years, targeted more than 6,000 consumers across the United States and stole more than $4 million.

The outrageous offenses listed in the sealed complaint include claims the defendants... ....
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Remember Mortgage Crisis: Lowering Down Payments Might Not Be the Answer

November 17, 2014

The mortgage market is over $8 trillion, and nearly 70 percent of all consumer debt, so changes in the mortgage market have a huge impact on all other areas of consumer debt, which supports credit grantors, ARM service providers, and many other industries. On October 20th, shortly after the release of our last mortgage blog (click here), FHFA Director Mel Watt announced that mortgage-finance companies Fannie Mae and Freddie Mac would start backing loans with... ....
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Celebrate our Veterans Every Day

November 11, 2014

Nearly 20 years ago, my wife and I bought our first home, a townhouse located in a neighborhood with other young family first-time home owners. Over the next few years, we got to know our neighbors and realized how fortunate we were to live near so many other couples with young families. What we did not realize at that time was how fortunate we really were to purchase the house we did.

By definition, townhouses are connected to adjoining houses so you get... ....
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EVENTS

DBA International's 18th Annual Conference


ARIA Resort and Casino
Las Vegas, NV
February 3rd-5th, 2015

DBA International's 18th Annual Conference - Passport to the Future - is one of the most well attended events in the industry attracting more than 1,500 attendees. As a sponsor, your company will receive unprecedented exposure to potential clients and leaders in the receivables industry. Providing opportunities for exceptional lead generation.......

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2015 Larger Market Participant Summit


FHI360 Conference Center
Washington, D.C.
April 23rd, 2015

insideARM.com and the iA Institute host the third annualLarger Market Participant Summit.

This exclusive event caters to the unique interests of the larger firms in the ARM industry, with unparalleled peer networking, best practice discussion, panels focused on the latest issues... and no exhibit hall.


For senior executives only,.......

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Collection and Recovery Solutions 2015


Four Seasons Hotel
Las Vegas, NV
May 6th-8th, 2015

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 of industry professionals like none.......

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