Vengroff Eyes 2008 Carefully After Powerful 2007

How do you top a 51 percent rise in collection activity for the year? Perhaps the best answer is to recognize your good fortune and move forward with a realistic view of the coming year.

Accounts receivable management and business process outsourcing giant Vengroff, Williams & Associates (VWA) reported Monday a 51 percent increase in collection activity in 2007 compared to 2006 ("VWA Sees 51 Percent Increase in Third-Party Collections Activity," Feb. 4, 2008). But Mark Vengroff explained to insideARM Tuesday that economic conditions will not allow that type of growth in 2008.

Vengroff, CEO of Garden Grove, Calif.-based VWA, said that his firm saw a huge influx of placements for third-party collection services last year as loose credit standards resulted in bad debt at many major creditors. But now, credit is tightening up.

“As credit quality rises, the placements will begin to dry up,” noted Vengroff. He expects continued high volumes of placements through the first half of 2008, however, with numbers coming down in the second half.

Last year’s increase outstripped an aggressive goal for the firm in 2007. Vengroff said that VWA was anticipating a 40 percent increase in placements for 2007. “We knew it was going to be high,” he said. “We didn’t know it would be quite so high.”

Vengroff noted that recovery rates remained steady in 2007 and have held up so far this year. But he expects rates to go down later in the year as strapped consumers have less to offer. “I think we’ll see recovery rates start going down about six months in [to 2008],” he said. For the time being, Vengroff said that VWA is “arming itself with information” to prepare for the downturn.