?More Payment Plans and Legal Collections,? Say ARM Companies in Survey

In an ongoing survey of the accounts receivable management industry, debt collection agencies say that they are shifting their recovery strategies en masse by allowing more payment plan arrangements and utilizing the legal collection channel to get paid.

More than 90 percent of collection agencies are likely to change their collection strategies this year, according to the early respondents to insideARM’s Credit and Debt Collection Industry Confidence Survey for the fourth quarter of 2008. The survey, which is still open and can be taken here, has been completed by more than 400 ARM firms thus far.

The survey is designed to gauge the performance and confidence of the accounts receivable management industry as it negotiates a difficult economic environment.

When asked “How likely are you to modify your collection strategies given current economic conditions?”, 52 percent of respondents so far said “Very Likely.” Another 38.8 percent said “Somewhat Likely.” The responses represent an uptick from the third quarter of 2008 in the number that are very likely to alter collection strategies; in that survey, 43.7 percent of collection agencies answered “Very Likely,” with 46.4 responding “Somewhat Likely.”

In an optional free response follow-up question, many survey participants revealed their specific strategy alterations. Increased payment arrangements were a common theme:

“We are being more flexible in making payment arrangements.”
“Accept more partial payments.”
“Allowing smaller payments from regular payers.”
“Give customer additional payment options apart from the current options.”

Many survey participants also noted a surge in legal collection placements as a part of their strategy shift:

“More likely to increase lawsuit amounts and move to suit more quickly.”
“Lots of legal if they have jobs or assets.”
“More legal.”
“We have already deemphasized front-end collections and are emphasizing litigation and post-judgment strategies.”

There were many other specific strategies shared in the survey. The full results will be published next week, so please be sure to take the survey before it closes.