Aug 01, 2013 Philip Burgess
Debt collectors have become one of the more critical components of the overall economy in recent years, especially as consumers and businesses continue to hold record high levels of outstanding credit. Without the debt collection industry, financial institutions and all types of lenders would likely buckle at the knees, unable to disburse any funds, since they would not be getting repayments on such a large volumes of loans.
However, regulators have started to step in because of the poor practices of some of the newer, as well as fraudulent, agencies that have started to become more common in the United States. Collection firms need to ensure that all policies are updated regularly in accordance with the progression of regulatory compliance and train all employees to follow best practices and strengthen brand images in a relatively difficult marketplace.
A lesson in being advantageous
NASDAQ recently reported that one debt collection firm that is in the Standard and Poor 500 has experienced massive growth in the past several years, while executives believe that the expansion has been largely the result of a healing economy. According to the news provider, a lower unemployment rate has led to strengthened consumer spending and a resurgence in sentiments among the general population, as well as business owners.
As a result, some debt collection firms have taken the perfect strategy in waiting for the most opportune times to begin efforts to communicate with consumers and businesses. The source explained that one of the largest debt collection organizations in the world, which is worth roughly $2.5 billion, has enjoyed 37 percent increases in revenues this year, as well as 65 percent growth since this time in 2012.
The collection agency has made it a point to focus on quality debts when in the purchasing process, and reducing all wasteful operations to improve the bottom line from both ends of the equation. NASDAQ noted that this strategy has been so successful that the firm has averaged nearly two and a half times the initial purchase price for acquired debt. What's more, the agency has been in operation for nearly 20 years.
The news provider added that by shifting business processes in real time to fit the demands of the modern market, this agency expects to continue to grow rapidly in the coming years.
Taking care of the basics
The Street recently reported that more and more debt collection firms are undergoing investigations and facing significant fines from federal regulators because of a complete disregard for the Fair Debt Collection Practices Act. According to the source, the Federal Trade Commission has fined several major firms because they were harassing customers.
The rules in place to defend consumers and businesses from fraudulent and abusive debt collectors continue to become more stringent. Agencies need to ensure that all employees are following the guidelines of the FDCPA in every conversation with a debtor, and hone in on more quality customer service to enjoy higher profit margins with the passing of each year.