Collection Agencies Return Liquidity in Rhode Island

Here’s a positive debt collection news story out of Providence, Rhode Island: Finding business liquidity in bad debt.

The Providence Business Daily talks with several New England-area industry members, including Steven V. Frankel, president of collection agency Ashton & Weinberg; and David A. Sands, president of the New England Collectors Association.

While giving brief attention to some of the PR issues facing collection agencies — “Let’s face it, no one likes to hear from a collection agency” is how the article opens — it settles into its main message fairly quickly: “third-party debt collectors have helped keep some businesses healthy over the last several years by providing them a steady revenue stream.”

Some highlights from the fairly lengthy article:

• Across the nation in 2010, $55 billion was recovered on both consumer and business-to-business debt, according to a recent report from Ernst and Young.
• Of the $55 billion collection agencies earned nationwide, $10.4 billion of the amount was commission for collection efforts, with $44.6 billion returned to creditors.
• The five states with the highest total debt collected were Texas ($5.3 billion), New York ($5.3 billion), California ($4.4 billion), Florida ($2.8 billion) and Illinois ($2.7 billion).
• The collection industry in Rhode Island directly employs 49 people and generates a payroll of $2 million. It also is indirectly responsible for about 100 jobs and $3 million in payroll. The amount of money collected and returned to the state’s economy was estimated to be $27.4 million, with about $400,000 going to state and local taxes.
• Ashton & Weinberg’s Steven Frankel’s thoughts on medical collections: “It’s almost impossible to make a living in that industry unless you make an enormous investment upfront and are well-connected with the insurance companies and doctors.”
• New England Collectors Association’s David Sands on debt buying: “Over the last decade, with the advent of debt purchasing and the reselling of debt after the first agency is unsuccessful, that’s what is getting the headlines, because these debts are usually really old. A [traditional] agency wouldn’t touch that. The chances for recovery are markedly less.”