What is the Size of the Accounts Receivable Management Industry?

In January, we hosted Part I of our three-part webinar series on the current state of affairs in the U.S. accounts receivable management (ARM) industry, which can be found here. We began the webinar by discussing the size of the ARM industry.

Size of the Accounts Receivable Management Industry

The collection agency market was sized at $12.3 billion in 2018. Going forward, we forecast 4.1 percent annual growth, on average, totaling about $14.8 billion by 2023.

First- and third-party collections form the most traditional aspect of the ARM industry and remain the largest service offering provided by U.S ARM companies.

The third-party collections revenue model today is, in large part, unchanged since its launch in the 1920s when the creditor paid the collector through commissions. Rates are lower, expectations are higher, but the premise is still virtually the same a century later. 

Debt-buying grew significantly at the start of the 21st century. After drastically declining during the recovery from the Great Recession, debt-buying market revenue gained momentum in recent years. We calculated the debt-buying market to have generated $4.6 billion in revenues in 2018, up 13.1 percent from its three-year low of $4.1 billion in 2016. Over the next few years, we forecast the debt-buying market to increase by roughly 5.0 percent annually, on average, and amassing more than $6.0 billion in revenue by 2023.

Number of Firms

Overall, the number of ARM companies fell from nearly 4,400 in 2000 to 3,400 in 2016. Small firms still accounted for about approximately 43 percent of all collection agencies in 2016.

Interestingly, however, the total number of all collection agencies across all size groups have fallen over the 17-year period, except for firms employing between 100 and 500 individuals. This tells us that rapid consolidation is occurring, but there could be a certain size at which firms are able to operate effectively and increase profits without being a part of a merger or acquisition.

If you’d like to discuss these points, market conditions, or your particular business needs, please do not hesitate to reach out to us at hq@kaulkin.com.

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