Armed with Data: The Different Between Success and Failure

The old adage “time is money” is most apparent among sales professionals. Sales people have to decide which companies to target that will net them the most attractive client for their employer. Knowing which companies to pursue, and which to avoid, can be the difference between success and failure. Information is power, and Kaulkin Ginsberg provides the information needed, whether you’re looking to expand your presence in a particular sector, or diversify your client base by entering a new market segment altogether.

Case studies on specific credit grantors in key market segments in the U.S. Accounts Receivable Management (ARM) industry are available exclusively for members of KG Prime, free of charge. If you’re not a member of KG Prime, click here to sign your company up. You will obtain a company code that you can share with your sales staff. Once you’re on the site, click on ‘Market Segments’, choose an ‘Area’ of interest, and select ‘Case Studies’ as your ‘Topic’. You will see a list of companies that Kaulkin Ginsberg analysts researched. Click on any of the individual companies and your sales staff will be armed with the data they need to decide which companies to target, which to avoid, and what topics to discuss at prospect meetings.

For example, did you know that the financial services sector is starting to grow again after years of reductions and setbacks? Does your sales team know which banks offer the best opportunities to pursue and which banks to stay away from? Perhaps HSBC is on your list of client prospects. If you reviewed KG Prime’s case studies you would know that HSBC is among the smallest financial institution included in our set of case studies. HSBC experienced a substantial increase in its total revenue after its credit card fees rose from purchasing about $6.3 billion of General Motors and Union Plus MasterCard receivables in 2009. This seems enticing, but if you read the case study further you will learn that HSBC agreed to sell its Card and Retail Services business to Capital One in 2011. In contrast to many other large commercial banks, much of HSBC’s net charge-offs are not attributed to credit cards – once again due to its sale to Capital One. The vast majority of net charge-offs are attributed to commercial loans and mortgages, and, if your company isn’t servicing those markets, you are better off not pursuing HSBC as a client.

What if your ARM company is already concentrated in the banking industry and you want to diversify into another market segment? You can research any market segment by reviewing the data that we already posted on KG Prime. Once you determine which segment you want to pursue, your sales staff can prioritize a list of targets by reviewing our case studies of companies within that market segment.

Take a look at credit unions, for example. This is one the least targeted market segments by ARM companies because credit unions are perceived as significantly smaller than commercial banks. Historically this was true, however, did you know that credit unions grew substantially after the Great Recession by filling the gap created when banks stopped originating loans? Our research shows that State Employees' Credit Union (SECU) is the second-largest credit union in the U.S., with $37.3 billion in assets, and 2.3 million members. SECU’s allowance for bad debt grew moderately since 2005, increasing 7.0% annually, on average, from $101.4 million to $227.4 million in 2017. Importantly, although allowance for bad debt has grown quite steadily over the 13-year period, it’s still outpaced by SECU’s revenue growth, suggesting that the credit union is appropriately collecting upon its receivables relative to its size. Nonetheless, with roughly $227 million worth of bad debt, there are still ample first-party collection opportunities available. Alternatively, SECU’s net charge-offs have increased quite rapidly, growing roughly 14.5% annually, on average, from $16.7 million in 2005, to $84.3 million in 2017. Not only have its net charge-offs grown more rapidly than its allowance for bad debt, but it grew even faster than SECU’s total revenue. This suggests that although internal collections are being handled relatively efficiently, SECU’s overall growth presents worthwhile third-party collection opportunities for the ARM industry.

Our mission with KG Prime is to provide ARM professionals with the strategic information needed to make informed decisions. Register today, free of charge, and see what you’re missing.

About Kaulkin Ginsberg Company

Since 1991, Kaulkin Ginsberg Company has provided critical strategic advice to the outsourced business services industry. Our client-centric approach covers almost every stage of a company’s life cycle and enables us to maintain longstanding relationships as trusted advisors. We provide mergers and acquisition advisory, strategic consulting, valuation and financial solutions, market intelligence and analysis, as well as litigation support and expert witness.

To confidentially discuss your interests, please contact us at hq@kaulkin.com or visit our website.