Collection Agencies See Improved Trends

Consumers will be happy to know there is a light at the end of the tunnel due to signs indicating the economy is slowly recovering. The Association of Credit and Collection Professionals (ACA International) recently reported that businesses of all sizes, in all industries and across all regions have demonstrated improvement in payment behavior. At first glance, it may appear that the economy is still struggling however Experian’s latest Business Benchmark Report indicates slight improvements over the past six months. In January, the national average number of days that businesses paid beyond the terms of their contracted amounts was down by two percent while the percentage of dollars delinquent remained stable over the review period. Although this does not seem like much, it is a positive change for the economy and encouraging news for consumers.

ACA International who is an organization that advocates for collection agencies also reports improvement in the percentage of dollars severely delinquent by businesses (91-plus days delinquent) where there has also been a two percent improvement over the past six months. The latest reports are optimistic for consumers and businesses as they indicate there may be some stability in expected payment behavior in the upcoming year. A few interesting facts to consider are: utility companies remain at the top of the risk score average of all industries, the Northeast continues to have the lowers risk score and saw a slight improvement compared with six months ago (0.6 percent) and businesses with more than 1,000 employees continued to show the highest rate of projected sever delinquency with an improvement of 7.8 percent in the last six months. As a collection agency, we see many businesses such as oil dealers struggle to get paid during certain months of the year.

This report is definitely good news but the trend upward will be slow so businesses and consumers should still be aware and cautious with their money. Mortgage lenders severely damaged the economy with irresponsible judgment and behavior and everyone still should be vigilant about their spending behavior in order to get back on track. Recent studies do show that foreclosures, while still up six percent from this time last year, are showing the slowest increase in four years and are down 10 percent from January.  The trends are encouraging and things are definitely getting better but it is a good idea to still remain cautious, keep an eye on your cash flow, be careful with credit extensions and carefully manage your accounts receivables.