The New Normal: How Collection Agencies Are Dealing With the Economic Downturn

Sometimes the logic is: debt collectors must love these economic downturns, because it means more business since more people aren’t able to pay their bills. It’s kind of gross logic, in that it turns an entire industry into an opportunistic mess, and while that kind of thinking sells opinion pieces in the mainstream press, it also sells short those in the industry who are providing a legitimate service, and who work with consumers on debt plans and budgeting.

Collections are at an all-time high; or, at any rate, collectible accounts are at an all-time high. The thing about a down-turn in the economy, though, is that it sort of has effects on everyone — debt collectors included. There may be more accounts than ever, but there’s less money than ever, and while I’m not super great at math, I do see when things are incompatible [cf. Nick Lachey and Jessica Simpson — and I have a story about Jessica Simpson that I’ll tell another time, but it involves a Hard Rock Cafe and a copy of the book BUtterfield 8 and fine! Stop whining! I’ll just tell you now: I was trapped in a Hard Rock Cafe in New York City for the worst dog-sitting job of my life (p.s., I’m not a professional dog-sitter) and Jessica Simpson was there, signing that book she wrote about weddings, because she was an expert after having been married for approximately 37 seconds, if you round up, and I was trying to get out of the Hard Rock Cafe to get to a terrible production of Rent (KIDDING! All productions of Rent are terrible; get a job, you stupid free-loading 20somethings), and I was pushed toward the table where Mrs Lachey-nee-Simpson was signing with a pink fuzzy pen and she reached out to grab the copy of BUtterfield 8 I had in my hand, I guess to sign, and I pulled away from her and shook my head no — essentially shaming the lady who would later go on to shame herself ceaselessly and I DO NOT THINK I’M TO BLAME.] and those two things are incompatible.

The Minneapolis-St Paul Business Journal is running a story about the challenge the collections industry is facing during this seemingly endless economic downturn. (You’ll need to be a subscriber to read the whole thing.) The harsh realities of cutting staff, increasing prices, and diversifying operations are becoming standard practice for many agencies — both large and small.

The Business Journal gets some commentary from Tom Gavinski, Vice President of I.C. System Inc. based out of Vadnais Heights. “Our vision was to be a $100 million company in 2010. When the recession hit, that really put a damper on those plans. We had to restart and go from a growth mode to a contraction,” Gavinski said.

The Business Journal piece tries to give some silver lining to the current gloomy forecast — at least for collectors in Minnesota: “Despite that, the collection industry’s long-term prospects are still good. By 2019, bill and account collections jobs are estimated to grow by 4.5 percent in the seven-county metro area and 8 percent in all of Minnesota compared to 2009 levels, according to the Minnesota Department of Employment and Economic Development. The Minnesota Department of Commerce licensed 33,163 active debt collectors and 668 agencies as of this week.”

So, let’s have a Friday conversation. (And let’s have a conversation that isn’t about the impending hurricane that’s going to hit the East Coast, including parts of D.C. and Maryland where this reporter and insideARM.com’s operations are warehoused because I seriously CANNOT DEAL WITH IT ANYMORE. And besides, housecats can swim, right?) What’s the economic landscape looking like for you and your agencies? How are you navigating this sort of new and not-at-all-great terrain? You might also want to take a look at this piece our publisher, Stephanie Eidelman, wrote about the new healthcare laws, and what their impending costs can do to a lot of smaller businesses.

And then? Hit us up in the comments. We’re not doing much here except comparing basements and preparing for the worst.