Commercial Collection Volume Sets New Record After First Quarter

An association that caters to the commercial accounts receivable management sector said last week that commercial collection agencies received a record volume of placements in the year ended March 2009.

The Commercial Collections Agency Association (CCAA) reported that commercial collectors received $15.4 billion in accounts for collection, a 27.9 percent increase compared to the year ended March 2008. In the first quarter of 2009 alone, $4.2 billion in commercial accounts were placed for collection, a 34.6 percent increase over the first quarter 2008.

CCAA noted that it still needs more data to determine if a slow-down in placements is developing into a new trend for the industry.

Emil Hartleb, executive director of CCAA, said in a press release, “The trend continues for increasing commercial account placement, however, the increase in account placement for the first quarter of 2009 when compared to the fourth quarter of 2008 was modest, only about 1.3 percent.  This may signal a future slow-down in account placement as companies may have cleaned out their marginal customer accounts and placed them for collection, or it may be a statistical aberration in that the fourth quarter represented an unusually large placement volume that bucked the seasonal trend.”

The numbers issued by CCAA are corroborated by business credit bureau Cortera. Statistics released by Cortera revealed an increase in March in accounts in collection. A total of 4.11 percent of all nationwide business-to-business accounts were in collection in March, up from 3.98 percent in February and 3.67 in January. Cortera also noted that 12.57 percent of all commercial loan accounts were past due in March, up from 12.14 percent in February.

Cortera, which uses data supplied by commercial credit grantors, noted that Nevada had the highest rate of past due commercial accounts with 22.3 percent; Oklahoma’s 7.51 percent was the lowest. The industries that fell behind at the highest rate in March were Retail Trade (20.9 percent) and Manufacturing (18.19 percent).

Hartleb explained that stressed U.S. consumers are putting pressure on businesses, causing them to fall behind on their obligations. “These times continue to be problematic for American business as bankruptcies rise and a greater number of customer accounts on companies’ aged trial balances move to the sixty and ninety day columns representing an increase in Day Sales Outstanding (DSO) and a decrease in cash flow,” he said.  “Companies are becoming more selective in their credit decisions and watching and reacting faster to slow paying customers.”