Shifting Focus From Credit Card Collections

Nick Jarman

ACA International recently reported that national credit card delinquency rates had fallen to 0.6 percent as of July 1. This shouldn’t come as much of a surprise to collection agencies working delinquent credit card accounts.

The industry has seen a significant decrease in credit card receivables over the past eighteen months and the trend should continue into the future. This decrease has forced collection agencies who are primarily focused on credit card accounts to “step outside the box” into other segments of the accounts receivable industry. It seems as though the last several years has been a gut check for collection agencies: it has forced them to either enter into other business segments they ordinarily would not, or put them in a position of working types of accounts where there may not be much experience.

Regardless, collection agencies that have been able to reinvent and in some cases redefine themselves have found success in spite of decreasing credit card account inventory.

As the collection industry has learned over the last several years, in order to survive it is critical to do more with less. Fewer collectors, less resources, fewer accounts, less revenue; but clients placing the credit card accounts understand the value and opportunity their accounts provide to collection agencies and thus their expectations have continued to stay very high levels.

Creditors understand if one of their agencies under performs, there is a deep bullpen of experienced and proven collection agencies ready to replace them. It is important for collection agencies currently working credit card accounts to understand supply and demand and based on that, their performance must remain consistent and above par at all times in order to give them the best opportunity to continue receiving placements.

The recent trend of decreasing credit card inventory is in stark contrast to several years ago when the industry was flooded with accounts while collection agencies were barely able to keep up. Because of this decline, the strategic approach to collecting credit card accounts has changed as well.

With lower volumes leading to lower consumer contact, an emphasis has to be placed on finding creative and legal ways to try and generate as many consumer contacts as possible in anticipation of generating revenue. Inevitably, the overall number of consumer contacts has gone down, but if each collector “values” each one of them, they will increase their opportunity to collect from the consumer. Each contact must be treated as if it is the first and last time a conversation will take place with the collector, and every effort should be exhausted to resolve the outstanding credit card debt. It is imperative for the collector to treat the consumer with professionalism and respect, while maintaining talk off discipline by following their call progressions and obtaining full and complete information, all the while building a relationship with the consumer.

The credit card segment of the accounts receivable industry has always been a stable for lucrative, volume filled opportunity. While the volume has decreased, the accounts that are available remain a lucrative opportunity for those collection agencies that meet and exceed creditor expectations and requirements. Until credit card delinquency rises again, collection agencies will have to remain open minded about other types of opportunities within other segments of the accounts receivable industry, while those currently working credit card accounts must remain determined and focused on their performance.

Nick Jarman is the Chief Operating Officer and partner of Delta Outsource Group, Inc., a nationally licensed collection agency located in Lake Saint Louis, MO. With over a decade of experience in the collection industry, Nick has developed an extensive knowledge of collector and management training, technology integration, work flow strategies, and analytics with an emphasis on decreasing expenses and increasing revenues. Nick has developed proprietary scorecards to evaluate overall collector and client performance. He has been a certified ACA International trainer since 2006 and in July 2011 achieved ACA’s Scholar designation.