Feature Story

Research Proves Importance of Debt Collection in the AR Cycle

A recent study proves that third-party debt collection has a $45 billion impact on the economy. 
What is its impact on your organization?

A study recently published by ACA International and Ernest &Young concluded the third-party debt collection industry, as a whole, plays a critical role in the economy at large.  The Impact of Third-Party Debt Collection on the National and State Economies, published in January 2012, outlines the following key areas that make up the $45 billion impact:

   - Recovering Assets

   - Job Creation

   - Tax Contributions

   - Charitable Giving

The Value of Recovered Assets and its Impact on Your Organization

Arguably the most crucial of these roles for your business is asset recovery.  Because it impacts the bottom-line, asset recovery is vital to the success or failure of a business.  As the study mentions, “Businesses, large and small, benefit from third-party debt collection because debt recoveries help them keep costs down and reduce their risk of financial insolvency and bankruptcy that may be triggered by unrecovered bad debt.”  Your debt collection partner(s) leaves just as large of an impact on your organization’s bottom line as the debt collection industry as a whole does for the U.S. economy.

Your organization has many choices in the area of accounts receivable, specifically asset recovery. Do you take advantage of early recovery cycles and advanced analytic scoring models to aid in increased recoveries and decreased costs? Do you have sufficient, well-trained resources internally to collect on past due accounts? If not, have you considered partnering with a collection agency? If so, have you compared the results of your internal group with those of a collection agency?

Utilizing a sophisticated collection agency with an experienced team and infrastructure to support large scale recoveries will lower your organization’s cost to recover and positively impact its bottom line. However, selecting the right agency is not only crucial to improving the financial picture but maintaining the brand and reputation the entire organization has worked so hard to create. Make sure your agency is returning a positive net back without harming your reputation, turning away your consumers, or giving your brand a bad name.

Written by CBE Group