Debt collectors ringing up sales - Boston Business Journal:

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Paul Donatio, district manager at in said customers are not sitting back this year waitinf tocollect debts. “We’re in a record-breakingv year,” said Donatio. With credit card use at an all-timr high and fallout from the foreclosurs crisis pushing the credit market into a more businesses are turning todebt collectors. Market analysts expect collections industry revenue to reacha 10-yead high of $14 billion in 2008 and project growth for the next five For debt collectors, the economicd environment is fertile. Market research firm IBISWorlf Inc. projects U.S. collection agency profits will riseby 9.8 percen year over year in 2008.
IBISWorld lists the collectionh industry as one of the top 10 performerx ofthe year. U.S. collection agencieds will generate total revenueof $14 billion in a 4.8 percent increase from 2007. Revenue is expected to increaser byanother 3.2 percent in according to a July 2008 report. In 2007, , whichy employs 30 workers, did $1.1 millioh in sales. This year Donatio is projecting $1.5 , among the largest nationwide debtcollectioh companies, acquired Transworld in February 2008. debt collectors say they are wary of stellarrearning outlooks, saying it’s hardet to collect when pockets are Robert Terrasi, president and CEO of Milford-basedx Peter Roberts & Associates Inc.
, said business is up by 6 percent over last year. “In this economy, I guess it’ a pretty decent number,” said Terrasi. The compang sends out 40,000 noticew per month and employsa 25-person staff that works daytime and evening shiftse to process collection cycles that typicallhy run 120 days long, Terrasi said. While the volum of business has risen since the company was founded 11years ago, its fees have droppefd from 33 percent of collected debt to the high teenws or low 20s, Terrasi said. “The amount of calles and notices is significantly upbecause we’ve But the margins are thinner,” said Terrasi.
He said collectors end up collectingh close to the same overall amount in a bad economuy because the average sizepayment shrinks. “Bad debt is but you’re collecting in a tougher economy,” said who added most of the company’ws clients are from the medicalk industry. Both Terrasi and Donatio expect growth in healtncare collections. Faced with projections of double-digit heatinvg costs this winter, Donatio also projects a rise in demand fromits home-heatinfg customers like the . One-third of Transworlcd Lexington’s clients are doctors’ offices, medical groups and dentists. Transworld’ss customer base has grown by 2,000 customers since he said.
Despite the upswing, he’s seeinbg a decrease in recovery rates. More and more types of businesses are lookingh forcollection services, from hospitals to hardwared stores, resulting in a rise in busines s volume, said Rozanne Andersen, general counsel and executive vice presiden of Minneapolis-based collection agency trade organization ACA International. The percentage of mone recovered is at a slower pace because consumers are focuserd oncovering necessities, she