News Article

Debt Collection

The traditional model for debt collection is dead according to Controlaccount Plc

By CreditMan Tuesday, March 12, 2013

Despite the commonly held belief that increasing personal and corporate debt is good for credit management and debt collection agencies quite the reverse is true, according to Director of Bromsgrove based Controlaccount Plc Paul Husband.

He quotes from an Ibis research report produced in October 2012 which included the statement:

“Given the nature of their business, debt collection agencies should have performed well, but this has not been the case. Industry revenue contracted in each of the four years from 2007 – 2011. Collection agencies struggled to collect as debtors became less willing or able to pay”.

The report identified just under 400 active businesses in the sector employing almost 12,000 people with revenues of £1billion. At the same time industry analysts such as Plimsoll were suggesting that as much as 25% of the sector was itself in dire financial straits.

On the positive side some companies with experience to draw on, over the many ebbs and flows of “boom and bust” years, evolved a business model which offers a comprehensive credit management service, based partly on vastly improved software case management.

In Controlaccount Plc’s case its 30 years of activity in the sector and the foresight to develop its own software solution have enabled the business to broaden its offer to clients.

Paul Husband continues:

“There was, as far back as 2007, an interesting if somewhat basic report by Kurt Obermaier published by the Credit Services Association which gave advice to anyone wanting to start a business in the sector. It identified that many companies were outsourcing small or large parts of their debt portfolio and this is a trend which has continued.

Another factor has been the increasing activity of some solicitors in debt collection and along with Factoring and Credit Insurance, all this has influenced the market.

Part of the problem for companies is that key members of the Finance team have seen outsourcing debt recovery and credit management as virtually an admission of failure. Fortunately we have been able to show by results that it is actually a very smart move which can improve cash flow, reduce the client’s management time and make a difference to the bottom line”.

Like many other service sectors credit management has to evolve to survive. Controlaccount Plc offers a range of services, including fully outsourced credit control function or a variety of modular components, to assist clients through credit management, debt collection, legal action and enforcement.

The modular approach allows clients to select specific services that would be most beneficial to their own organisation and run bespoke campaigns without the associated costs of employing additional staff, as short and long term projects can be undertaken by Controlaccount Plc to test results of a new approach.

With the economic backdrop unlikely to change much over the next few years Controlaccount Plc expects the outsource model of credit management to provide an increasingly attractive option.

Controlaccount Plc has been providing a comprehensive range of recovery and investigation solutions for over three decades.

The business specialises in in-house legal recovery, credit control and trace investigation, with dedicated departments operating from strategically placed headquarters in Bromsgrove in the West Midlands.

The company utilises CogendaWorks, the only integrated software solution specifically designed to operate seamlessly across the entire case management process, from collection through to legal recovery.