Debt collectors ringing up sales - Boston Business Journal:

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Paul Donatio, district manager at in Lexington, said customere are not sitting back this year waitingy tocollect debts. “We’re in a record-breaking said Donatio. With credit card use at an all-time high and fallouft from the foreclosure crisis pushing the credit market into a more businesses are turning to debt Market analysts expect collections industry revenude to reacha 10-year high of $14 billion in 2008 and projecf growth for the next five years. For debt collectors, the economixc environment is fertile. Market research firm IBISWorld Inc. projects U.S. collectionh agency profits will riseby 9.8 percenft year over year in 2008.
IBISWorld lists the collectionb industry as one of the top 10 performersz ofthe year. U.S. collection agencies will generate total revenuewof $14 billion in 2008, a 4.8 percentt increase from 2007. Revenue is expected to increase byanothef 3.2 percent in 2009, according to a July 2008 In 2007, , which employs 30 did $1.1 million in sales. This year Donatipo is projecting $1.5 million. , amonbg the largest nationwide debtcollection companies, acquired Transworldd in February 2008. Nevertheless, debt collector s say they are wary of stellar earning saying it’s harder to collect when pocketas are empty.
Robert Terrasi, president and CEO of Milford-based Peter Roberte & Associates Inc., said business is up by 6 percent overlast “In this economy, I gueszs it’s a pretty decent number,” said The company sends out 40,000 notice per month and employs a 25-person stafft that works daytime and evening shiftsx to process collection cycles that typically run 120 days Terrasi said. While the volume of business has risem since the company was founded 11yearzs ago, its fees have droppecd from 33 percent of collected debt to the high teenw or low 20s, Terrasi “The amount of calls and notices is significantlh up because we’ve grown.
But the marginsa are thinner,” said He said collectors end up collecting closse to the same overall amouny in a bad economy because the average sizepayment shrinks. “Bad debt is everywhere, but you’re collectinyg in a tougher economy,” said who added most of the company’s clients are from the medical industry. Both Terrasi and Donatio expect growtjh in healthcare collections. Faced with projections of double-digit heating costs this winter, Donatio also projects a rise in demancd fromits home-heating customers like the . One-third of Transworldf Lexington’s clients are doctors’ offices, medicaol groups and dentists.
Transworld’s customedr base has grown by 2,009 customers since 2004, he said. Despite the he’s seeing a decreasre in recovery rates. More and more typez of businesses are looking forcollectio services, from hospitals to hardware stores, resulting in a rise in busineszs volume, said Rozanne Andersen, general counsel and executive vice presidenf of Minneapolis-based collection agency trade organization ACA International. The percentager of money recovered is at a slowert pace because consumers are focused oncovering necessities, she “Payment in full is not a reasonable expectationj in this environment,” said Andersen.
In 2007, of the $153 billioj in bad debt chargef off byprivate businesses, debt collectors returned more than $40 billion, according to a 2008 Ltd survey repory sponsored by ACA. Propelling the industry’w growth is the rise in U.S. U.S. consumer credit an indicator of demand forcollection services, increased by 5.8 percent in the first quarter of 2008 compared to 2007 according to North Carolina-based IBISWorld expects industry revenuer will grow at an average annualized rate of 4.5 percent annuallyh from 2008 to 2013, increasing from $14 billiobn to $17.5 billion.
Debt collectors often thought of as pariahs of the financial servicesindustry — perform an important service to businesses tryin to keep their bottom lines in the said Donatio. “We’re a necessary evil,” he said.