Condition of Debt Collection Industry in 2021!


Posted September 24, 2021 by GroupUCS

In covid 19, all of the industries have been impacted either in a good way or bad. We don't know for how many years this effect will go on. One thing is for sure, things have been changed and will continue to be so.

 
In covid 19, all of the industries have been impacted either in a good way or bad. We don't know for how many years this effect will go on. One thing is for sure, things have been changed and will continue to be so. Businesses are still grappling with the impact of lockdowns and restrictions related to the pandemic. Here, I have discussed 4 key facts of the debt collection industry:

1. Fewer third party debt collection agencies

The number of collection firms has declined from 9,400 in 2018 to 7,401 in 2011. This is a drop of 2.5% per year. In 2020, we have seen a huge decline in debt collection agencies, with only 6699 remainings (10% drop). While most of the decline has been due to mergers and acquisitions, most of the firms that simply closed were small, local firms or large agencies with heavy overhead. More closures are likely as a result of the ongoing slowdown.

2. Expense and related debt has declined

In this pandemic, most people's income goes slow down, spending too. There's less need for clothing, gas, and other items, consumers are tightening their belts and saving money. For the first time since 2014, total household debt declined in the second quarter of 2020. The number of new loans also declined in various types of loans, with the sharpest decline in the origination of bank cards. The economic downturn has not yet translated into higher delinquency rates for consumer loans. Delinquency rates for credit cards and unsecured personal loans have come down while ticking marginally for auto loans. Government-mandated forbearance programs have resulted in a sharp drop in delinquencies for student loans and mortgages. Whether this will continue depends on the profile of the economic downturn and additional federal aid.

3. Employees-Related expenses are Bigger

Employee-related expenses were the major cost factor for the debt collection agency in covid-19. More than half of the companies surveyed had seen an increase in employee salaries. Covid-19 led to the move to remote work for most industries, including collections, and this may continue as office space is a huge employee-related expense. Advanced tools and technology were the 2nd most expense for the debt collection agency. Technology that includes automated tasks can reduce employee expenses. Larger companies are more likely to adopt a wider range of debt-collection tools and technology.

4. Changing ways of Communication

Effectively communication is the biggest reason for successful collection. We need to go to the right person at a right time. However, new forms of communication are emerging to align with emerging norms and priorities, including text messaging, ringless voicemail drops, chatbots, and other forms of automated communication that use artificial intelligence. Collection agencies will have to keep changing communication methods and regulations.

Changes at Unified Credit Solutions Group

In this pandemic, Group UC also faced dramatic changes as we have worked only on 3 days/week notice. As the year continued, we switched from paper reporting and checks to electronic payments, statements, and summary customer status reports, which could be done from home. While we were moving towards automating more administrative tasks, we didn't seem to automate any archiving activities. We still use a custom method for each claim, which is far more effective than the automated approach.

We revamped our collection strategy to understand and build relationships with the impact of COVID on debtors so that our customers are at the top of the list for payments. Finding cell numbers became a necessity for people working at home as calls to office numbers often did not yield results. Surprisingly, the success rate of our collection didn't drop in the covid19 pandemic.

We have entered 2021 with a vaccine and a new administration approach, and are doing well. If you need any type of debt recovery services, Contact us, how we can help you! We are glad to assist you.
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Issued By Team Group UCS
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Categories Business , Finance , Industry
Tags b2b , business , debt , debt collection , finance , industry
Last Updated September 24, 2021