Collection Industry Adding Jobs in Difficult Environment

Despite a labor market in the U.S. that has not shown much sign of improvement, the accounts receivable management industry has quietly ramped up hiring over the past quarter as clients flood collection offices with work.

In insideARM’s latest Quarterly Credit & Debt Collection Industry Confidence Survey, only 11 percent of collection agency respondents anticipated laying off workers in the fourth quarter of 2009, the lowest rate since the recession began. In contrast, 55.1 percent of collection agencies thought their employee headcount would be larger in six months, with only 8 percent expecting a smaller staff.

A couple of publicly traded ARM companies have also announced staff additions. Portfolio Recovery Associates said that its collection staff grew from the second quarter to the third, while Asset Acceptance Capital Corp. said in its third quarter earnings release that it has “made solid progress in achieving our goal of increasing collection account representative headcount.”

We had certainly caught plenty wind regarding third party collection agencies hiring over the past several months. But it really hit home hard when an ACA International public relations representative contacted me about a month ago looking for data to share with the mainstream media. Their membership had been reporting pretty strong growth and they wanted to make sure the media knew the story.

Should we expect a headline soon along the lines of “Collection Agencies a Jobs Safe Haven in Recession”? Probably not.

But it is an interesting development.

We’ve known for quite a while that performance at collection agencies, along with nearly every other type of company in this country, was struggling. So how can they afford to bring on new people?

“Afford” is a difficult word to define in this situation, so let’s just say ARM executives are adding collectors out of necessity.

Credit issuers have been forced into a strategic liquidation strategy that sees them placing more accounts with third party debt collectors. Debt portfolio pricing has steadily eroded over the past couple of years, culminating in a market that – in some cases – is 50 percent lower than just a year ago. This has understandably led to issuers refusing sales at depressed prices.

As recovery executives at credit issuers have adjusted to a new reality, they’ve had to deal with more debt. Chargeoffs are at record highs in nearly every consumer credit category, with the average credit card chargeoff rate hitting 10.24 percent in the third quarter.

While many collection agencies that count debt buyers as clients have struggled, with fewer accounts and a difficult collection environment, firms that cater to issuers have only had to deal with poor collections as accounts have been flying their way. So they need more workers.

This is the perfect opportunity for the ARM industry to show traditional media the impact our businesses have on the broader economy by helping banks in a difficult time. As a bonus, the debt collection industry is one of a few that’s actually in expansion mode as jobs are continuously shed elsewhere.