ARM Companies Tell Different Tales in First Quarter Confidence Survey

The reported performance and staffing behavior of debt collection agencies, collection law firms, and debt buyers was significantly different in the first quarter of 2009, according to the results of insideARM’s Credit & Debt Collection Industry Confidence Survey.

Taken by more than 560 accounts receivable management professionals, the confidence survey for the first quarter continued to show relative weakness in the collection industry as the nation struggles with recession. But survey participants revealed that the economy is impacting ARM companies in different ways.

When asked how their companies’ performance fared in the first quarter of 2009, collection law firms reported the highest average performance rating on a scale of 1 to 5, with 5 being the highest. Law firms reported an average performance rating of 3.54. Debt buyers reported the lowest average rating at 3.13. (Download the entire report PDF for free)

As has been reported extensively over the past several months, ARM firms noted that account placements soared in the first quarter. The first three months of 2009 saw over 63 percent of ARM firms reporting “Moderate” to “Significant” increases in account placements or portfolios available for purchase. The increase in accounts seemed to impact collection agencies more than their ARM counterparts.

For that reason, most likely, the percentage of collection agencies reporting layoffs in the first quarter was the lowest among ARM firms, 25.7 percent. Of all company types taking the survey, vendors to the ARM industry – software providers, mailing services, technology companies, etc. – reported the lowest instance of layoffs in the quarter at 22.9 percent.

Collection law firms, by far, had the highest percentage of companies reporting layoffs in the quarter, 40.7 percent

The interesting juxtaposition of high layoffs and best-in-industry performance by the law firms is at least partially explained by a comment given by survey respondent identifying themselves as an attorney:

“Can no longer waste money on collectors and things have improved without having them on staff. Dealing directly with attorneys seems to settle cases very quickly.”