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Just over half of DCAs grew their turnover during the last year, according to
the latest Experian White Paper report into the industry.
The paper, "Debt Collection in Lean Times", shows that while 52% of DCAs
improved turnover, though the number of firms that ceased trading increased to
10%, compared with six per cent the year before.
One per cent of DCAs became insolvent during 2008, while a further five per cent
were wound up with no debts.
In 2009, however, this had increased to two per cent of DCAs becoming insolvent
owing money, and a further eight per cent being dissolved.
Despite the wider public believing it to be "boom time" for debt collection DCAs
have come under increasing cash flow pressures.
Simon Waller, Head of Collections at Experian UK & Ireland, explained: "Although
there was strong demand for DCA services during 2009, it was a challenging year
for the DCA community.
"Despite this, those forward thinking DCAs finished 2009 financially stronger
than they started it.
"These pockets of excellence demonstrate that investing in people, operations,
data and systems can deliver significant substantial improvements in business
performance."
Experian has said that firms that are able to integrate and automate collections
activities as well as make use of available credit, demographic and behavioural
data to prioritise accounts according to risk are better equipped to deal with
changes to the economic climate.
The DCA sector is made up of 600 firms employing over 14,000 people. Combined,
these firms total a £700m turnover.
The top ten firms account for 39% of the industry and 35% of employment. While
74% of the 600 employ less than ten staff.
Peter Wallwork, chief executive of the Credit Services Association & Debt Buyers
and Sellers Group, commented: "This year will be a challenging one against a
context of rising bankruptcies, increasing taxation, and the availability of
less disposable income, and debts will undoubtedly become more difficult to
collect.
"This research will show the steps that our industry is taking to improve the
customer journey while still delivering the results our clients demand."
Source:
Getting Paid
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