Hiring Concerns Top of Mind for Third-Party Debt Collectors

Survey reveals challenges around attracting employees in a tough labor market, as well as a continued appetite for new technology.

12/03/2021 2:00 PM

3 minute read

Employee and technology investments are on the rise in the accounts receivable management industry, according to a new report by TransUnion and Aite-Novarica Group, which reflects an overall feeling of optimism about the future despite concerns about hiring and retention.

Based on a survey of 151 third-party debt collection professionals and interviews with 12 industry thought leaders conducted in Q2 and Q3 2021, the report found that while “many collection firms and industry thought leaders noted reduced or stable account volume this year, over half (56%) believe their company will work more accounts in 2022.”

Relatively few companies said they planned to make significant changes to their overall business strategy, with just 19% electing to move into adjacent services such as business process outsourcing and only 13% changing the types of debt collected.

“In the survey, we saw that there was a lot more anticipated investment in business development and marketing,” said Jason Klotch, vice president of third-party collections in TransUnion’s diversified markets business. “To me, that focus, combined with an expectation for more accounts, does suggest optimism.”

Remote is Here to Stay

The majority of respondents indicated that they shifted one or more roles to remote work during the pandemic, with most indicating they will be implementing a permanent hybrid model of remote and in-office work going forward. Nearly two-thirds (64%) of companies are either considering or already offering remote work arrangements for new hires, including collection agent positions.

“The top two reasons companies say they are considering keeping a remote or hybrid work environment are to attract better talent and increase retention,” Klotch said. “But we’re seeing some concerns about sustaining hybrid work environments, particularly when it comes to employee engagement, productivity and regulatory restrictions.”

Larger companies and those with a national collection footprint seemed more willing to shift to remote work since the start of the pandemic. Eighty-seven percent of larger companies had collection agents shift to remote work, compared to just 43% for smaller companies, according to the survey.

Technology Spending Trending Up

Approximately seven in 10 collections professionals (69%) said technology spending will modestly or significantly increase in the next two years. Klotch noted most companies are focused on payment portals and self-service capabilities. This trend is due in part to the adoption of Reg F, though tech investment plans differ based on company size and the amount of resources available to deploy.

“While certain tools have been adopted somewhat uniformly across the industry, others are far more likely to be in use at larger companies,” according to the survey. “While midsize and large companies have similar adoption rates for online portals, letter vendors and call recording—and much higher rates of adoption than smaller companies—the largest companies stand out for their use of a wide range of tools, such as IVR, which are far less frequently adopted by their counterparts.”

Among tech investments, one area of growing interest is allowing mobile payments facilitated by Venmo, Zelle or similar service providers or via a QR code; about a third of companies surveyed provide this functionality.

Other findings:

  • Liquidation rates vary dramatically by debt type, with commercial debt generally having the weakest liquidation rates and health care and consumer loans experiencing the strongest. All respondents whose companies collect commercial debts reported liquidation rates below 20%. This is a contrast to 2020, when about half of respondents reported commercial debt liquidation rates of 20% or greater.
  • By year end, the number of collections employees was expected to increase to 137,928 compared to 134,347 in 2020, though it remains below 2018 levels (139,273). After a few years of declines, we’re now seeing a level of staffing on par with recent highs, according to the survey.
  • Third-party debt collection companies continue to deal with litigation challenges. While 62% of respondents believed litigation was at least somewhat challenging in 2020, this has increased to 82% today.

Read the survey here.

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