An important element in benchmarking is knowing what your peers in the industry are doing, thinking and lamenting. As human beings we enjoy celebrating success with others and we also find a sense of comfort in commiserating with those we know and respect relative to issues that plague us. Organizational leaders can certainly choose from a long menu of daily hindrances that might appear when running a corporation in the accounts receivable management space. But, are there some common themes of frustration shared by those that manage these firms?
In order to provide our readership with some timely and valuable industry feedback, we recently reached out to C-level professionals in the collections space and asked them to share their most pressing pain points encountered in managing their respective organizations. We asked them to list a few of the dynamics that keep them awake at night, provide the highest levels of frustration, aggravation and stress. Here is what we learned.
I am going to focus on the top four issues that found their way onto most of the lists presented to Collection Advisor. The very interesting element here is that most of these elements were found in part on virtually every response received. We have clearly discovered the most pressing matters to high level management in the collections space today.
The following ideas are not listed in order of importance or frequency of topic, as they were uniformly covered by the respondents:
It will likely come as no surprise that the cause of much continued consternation in the ARM space is found on the regulatory front. It is not necessarily the depth of these regulations but the incredible breadth of the rules. Agencies are lamenting the constantly moving target of local, regional, state and federal regulators that seem to be focused on trying to control the businesses of collections professionals. Virtually every aspect of the collections office is plagued with oversight that forces management to perpetually run in circles.
Our ability to navigate productive, profitable operations is compromised by regulator oversight. The costs of adhering to these rules is prohibitive to many operators. Ask anyone that is truly nationally licensed how many human and financial resources are devoted to the licensing function.
Compliance officers are driven to create multiple layers of compliance protocol regarding what are often overlapping or competing rules. The mandates of call audits and data security overwhelm the average, compliant operation. The balance between being compliant and affording the collections team the leverage to make a profit is being squeezed.
Bad operators should be brought into check. Consumers have the right to sue those that harass them and/or treat them unfairly. However, the industry today is bombarded by thousands of suits each year initiated by growing numbers of predatory firms that sue strictly to make a buck. It has nothing to do with consumer protection.
The problem with these suits is CEOs and operations directors often take them personally. They get very emotionally involved in the process and much stress is created. Apart from the actual suit filings there are thousands of pre-litigation demands presented to firms annually. It is a money grab and agencies write the settlement checks regularly. We get worn down with the constant onslaught of these activities.
3. Unrealistic Client Demands
The larger the client, the more complex the relationship is in today’s market. The mandates received by agencies from the creditors they represent and the request for proposals they generate, drive down profitability and operational efficiencies. They want more and more for less and less. And, our clients are becoming larger as mergers and acquisitions in the creditor space mirror the same dynamic being experienced in the ARM industry. Our regional hospitals are being acquired by huge medical conglomerates. Financial institutions continue to consolidate.
Not only do the demands increase but agency fees are absolutely bottoming out. How much lower can rates go? Can we really make a profit on a hospital client that has reduced fees from 20% to 11%? Virtually all respondents expressed concerns that profit margins are infinitesimal in 2018.
4. Finding Quality Team Members
For as long as I can remember, especially with the training work I have conducted, companies complain that it is hard to find team members that are educated, motivated and possess a good work ethic. Collection positions experience turnover at alarming rates in some organizations. With regulatory, compliance and litigation concerns, the days of just hiring a warm body are over. We MUST have employees that embrace the cultures we are mandated to maintain.
Organizations today spend far more resources on recruiting, training and retaining staff than at any time in the history of the industry. We need to find the right people for our open seats. We then need to provide comprehensive onboarding training to prepare them for the compliance, collections and technological information they need to execute their jobs.
With the advent of the Consumer Financial Protection Bureau, we not only have to train but we must quantify the employee’s comprehension and retention of the material covered. Gone are the days of throwing a group of 25 people in a room for two hours and reviewing compliance once a year. We must prove it.
If the above challenges make your list of industry frustrations, then you are not alone. These items represent the core of what makes the ARM industry troubled and the basis of much stress for industry leaders. Change is a central part of business in today’s world. Our readers who are more serious and conservative will appreciate the words of Charles Darwin when he said, “It is not the strongest or the most intelligent who will survive, but those who can best manage change.” And those who have a sense of humor and a less serious perspective will appreciate the words of the great Dr. Seuss who quipped, “You have brains in your head, you have feet in your shoes, you can steer yourself any direction you choose!”
We would like to thank the many industry professionals that responded to our request for ideas! We continually welcome thoughts and best practices from our readers. Feel free to send us your feedback for possible inclusion in a future column. Until next time, I’m in a collection office hear you!