For Immediate Release
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2017 Could See Some Change With New Administration According to IACC
Certain trends that began in 2016 could continue through 2017, but a new President and administration will impact domestic and global economies, and, in turn, the collection industry, IACC Experts Say
By Jessica Hartmann
IACC Executive Director
Trends and predictions for 2017 in the commercial credit, collection and related industries will be marked by uncertainty and continued speculation regarding a new President and administration assuming the White House come January 20, according to International Association of Commercial Collection Agency (IACC) experts. Members of the IACC also anticipate some trends that began in 2016 will continue to have effect into 2017.
“As a whole, I believe that 2017 will be a close repeat of 2016 until a direction of the new administration becomes more apparent and how it will affect the domestic and global economy,” said Bryan Rafferty, Vice President of Commercial Collection Agency of NY.
According to Rafferty, this uncertainty will affect global business which will, in turn, directly affect US businesses and the commercial collection agency sector.
“I believe that creditor’s will be cautious in extending credit during the first year of the new President’s term to see what his agenda is and how it will affect the economy,” Rafferty continued, further suggesting that creditor’s goals will be to protect what they have while mitigating risk if something adverse occurs with the economy.
“The incoming President suggested a stance of deregulation in the financial sector during his campaign,” Rafferty continued. “This could dramatically affect the collection agency world.”
Richard Kramer, senior vice president of Enterprise Sales, Altus Global Trade Solutions, believes that if the U.S. and global economies continue to improve, the credit environment will in turn improve and drive increases in commercial transactions, which should drive placements up with improved yields.
“Repatriation of funds back to the U.S. will create more investment domestically,” Kramer commented.
Kramer further stated that commercial agencies that can drive cost reductions through process efficiencies versus simple labor arbitrage will be better positioned against those that operate off the client system, because many U.S. companies will be reluctant to send work outside the country.
Kramer hopes that government deregulation of the financial sector will impact the collection agency compliance landscape and the government will also back off on many of the compliance regulations previously imposed.
“That likely won’t be seen until 2018 or later,” Kramer explained. “But with less restrictive lending practices, there will be more consumer and commercial lending, which will create additional transactions that will require collection.”
With regard to the new administration’s effect on the global and domestic economy, Kramer feels good about the domestic economy, but remains speculative about the global situation. “I see a more favorable corporate tax environment domestically, but Trump’s protectionist position on leveling the field with trade agreements like NAFTA will create challenges for Mexico,” he said. “It will also be interesting to see how China responds.”
Fred Milligan, a branch manager with Altus Global Trade Solutions, concurs. “I think China wants the Yen to be the new U.S. dollar,” he commented. “And we seem to have an incoming president who is doing the opposite of the current administration and leaning more to Russia and away from China. China has so much trade with the U.S.; at some point we need to make a stand with what China is doing.”
“If Trump’s infrastructure spending plan is approved, it will help improve job growth and there will be pressure to keep jobs in the U.S., forcing many companies to re-think their near-shore and off-shore strategies,” Kramer continued.
“If the Trump presidency continues to focus on keeping jobs in the U.S. and builds momentum over time,” speculates Ed Morvant, senior vice president of Client Services for Altus Global Trade Solutions, “this could result in a reduction of companies that utilize international third party outsourcing.”
“In general, I think the new administration will have a positive effect on the economy based on what we’ve seen with the stock market hitting record high numbers,” continued Morvant, “but that could be offset by interest rate increases over time.”
Milligan agrees that the new administration could have a positive effect on the economy. “I like that we elected a business man,” he explained. “I hope we can increase GNP and grow the business sector by lowering taxes. More small business growth can only mean good things for our industry.”
Matthew Soban, sales manager for Altus, agrees that ultimately, the outlook for the economy is bright, but encourages patience and warns that, initially, there could be a downfall in certain sectors that will have to work from behind.
2016 Trends Spill Over into 2017
According to Rafferty, several 2016 trends – creditors centralizing to shared service centers, slow economic growth, and smaller commercial collection agencies disappearing or merging –will continue into 2017.
“We have seen some large creditor companies consolidate internal resources, obtaining growth through acquisition in order to increase market share and profitability,” he observed.
According to Rafferty, with the number of agencies being reduced due to acquisition and closure, there are opportunities for third party growth due to less competition.
“For companies that can operate effectively under the current regulatory/compliance driven environment, there will be a lot of opportunity to gain market share through acquisition, business development, and competitive scorecard wins,” explained Kramer. “Clients are looking to reduce the number of agencies they use in order to make compliance oversight and vendor management easier, exemplified by the Department of Education award and the trend in financial services awards.”
“If the increased volume trend continues,” explained John Meehan, New Jersey branch manager, Altus Global Trade Solutions, further, “of course less competition will mean more business. As our competition decreases, I see competitive pressure into larger clients. Companies will ultimately fail if their revenue is too heavily weighted on too few clients. Organic growth seems pretty obvious with more clients as well as more services to sell them.”
Meehan sees a potential hidden growth opportunity in client retention, with continued focus on performance, oversight, and client-facing services. “Avoiding attrition, coupled with some SEO optimization and brand recognition should keep us growing our current opportunities, as well as acquiring new clientele in a shrinking market.”
Another continuing trend is the increase in creditors issuing RFPs to identify suitable collection agencies to work with. Kramer believes it will be critical for agencies to respond by developing a strong web and marketing presence as many creditors continue to do more preliminary research to determine who to engage.
“Additionally, there will be an even greater need to engage professional resources to ensure that the content and appearance are professional and stand out from the competition,” Kramer concluded.
Jessica Hartmann has more than 18 years of association and collection experience, including managing communications, membership, events, and education and credentialing. She has led the International Association of Commercial Collectors as its executive director for the past two years, and had previously served IACC in other roles for more than a decade. With members throughout the U.S and in 25 other countries, IACC is the largest organization of commercial collection specialists in the world.