The collections industry continues to contract and 2020 was a tough year for a lot of companies, but there may be brighter days on the horizon, according to a report released yesterday by TransUnion. The credit reporting agency, in partnership with Aite Group, released a report that predicted the number of collection accounts is expected to increase in 2021 as more individuals deal with the fallout of the coronavirus pandemic.
A copy of the full report can be accessed by clicking here.
Between 2016 and 2020, the number of collection agencies across the United States shrunk by 15%, to just under 6,700 companies, according to the report. But, the agencies that are still in business are operating leaner and with higher profit margins. More than two-thirds of participants in the report said they received payments in full, settlements in full, or partial payment arrangements this year, up from 59% who said that happened in 2019.
“Consolidation in the collections industry has taken place for the better part of the last decade, and the COVID-19 pandemic helped accelerate that trend. Less credit activity, smaller balances and a large number of accounts in accommodation status certainly slowed collections activity, but the pandemic brought on a whole new set of challenges. Most notably, work-from-home mandates that many collectors were not equipped to handle,” said Glen Goldstein, executive vice president of diversified markets at TransUnion. “Collections is a major part of the consumer credit ecosystem, and our report highlights that we will see more normal conditions in 2021, which we believe will benefit the overall market.”
While more agencies reported using text messaging this year, and email and text messaging were the most popular channels that agencies plan to add to their operations in the next two years, manual dialing, using an automated telephone dialing system, and sending letters were still the cited as the most effective ways of getting in touch with consumers.