Accounts Receivable Management

The U.S. accounts receivable management (ARM) industry has undergone a tremendous transformation since the start of the twentieth century. Initially, small collection agencies proliferated throughout the U.S. in the 1920s and 1930s. When creditors could not collect account balances on installment plans or retail accounts, these companies were hired on a contingency basis. During this time, debt collectors were either viewed as thugs who used intimidation to collect on debts, or mom-and-pop shops run out of a spare bedroom using an extra phone line.

By 1970, the modern U.S. credit industry was coming into its own. In turn, the amount of outstanding consumer credit grew sevenfold during the 1950s and 1960s, from $19 billion at the beginning of 1950 to $127 billion at the end of 1969. However, the trend toward a consumer credit economy led to the perhaps unexpected consequences of higher delinquency rates among consumers and the corresponding increased demand for debt collection services to address the issue.

As a result, Congress passed the Fair Debt Collection Practices Act of 1977, citing “abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors.” The FDCPA would not only reshape the ARM industry for the better, but also convey government recognition of the important role debt collection plays in the U.S. credit economy.

Today, the ARM industry is an amalgamation of several market segments – debt collection, debt buying, collection law firms, and repossession services – that generated more than $14.5 billion in aggregate 2015 revenue and is projected to grow to more than $17 billion in annual revenue by 2020 at a compounded annual growth rate of more than 4 percent.

The industry is characterized by its sizable investments in advanced technological systems that support call-center and collection operations, and compliance divisions through voice and risk analytics software. As a result, the industry attracts interest among both strategic and financial buyers seeking economies of scale opportunities within a dynamic yet highly fragmented market.

While the ARM industry continues to evolve, Kaulkin Ginsberg is available to advise those ARM companies who are committed to maximizing their growth and exit objectives, as we have been since 1991.

As a result of the important role the ARM industry plays in the U.S. consumer credit economy, the industry will continue to evolve and attract interest from financial and strategic buyers. Kaulkin Ginsberg has served as a strategic consultant and transaction advisor to industry executives for decades, and prides itself on its knowledge and expertise the ARM industry.

We are excited about the potential within the ARM industry and look forward to working with owners and executives who are committed to achieving their growth and exit objectives.

If you are interested in receiving a copy of The Accounts Receivable Management Industry Overview, or would like to confidentially discuss your interests in the ARM industry, please contact a member of our strategic advisory team at hq@kaulkin.com.

 

 

 

 

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