By ACA Seattle National Conference, July 2017
This year's annual ACA National Conference finally returned to our Pacific Northwest stomping grounds after a nearly 30 year break! InterProse attended as a Gold Sponsor, and we were thrilled to see many of our customers and well-known industry contacts make the trip to enjoy a slice of our 3 month window of awesome Pacific Northwest weather.
COMPLIANCE
A hot topic of this year's conference was compliance, with many scheduled presentations focused on how agencies can profitably and securely navigate the growing list of regulatory and legal restrictions placed on the industry. In a recent article written by Fred Blitt in Collection Advisor titled Our Top 6 Compliance Christmas Wish List Items, Bill summarizes several topics important to this issue.
An interesting by-product of the increasing compliance burden is the growing demographic of attorney collectors. Numerous conversations with industry stalwarts elucidated a collective belief that attorneys, accustomed to documentation and regulatory nuance, are professionally more comfortable with the requirements. As a result, many observed a trend by agencies to hire attorneys to fill executive leadership roles.
Collections industry insiders also predicted that more small- to medium-sized agencies will be acquired by attorneys or law firms as agency owners opt to leave the business rather than conform to the new requirements.
Within the past year, we at InterProse have experienced a statistically significant rise in the number of inbound leads from attorney collectors by percentage.
CONSOLIDATION
Consolidation was a frequently discussed topic in Seattle as the same industry leaders predicted the trend of agency consolidation or acquisitions will continue and likely accelerate in the coming years.
Agency ownership demographics were objectively discussed by many attendees, highlighting the fact that many, if not most, small- to medium-sized third-party collection agencies are owned by Baby Boomers who are now considering how they transition to retirement. The story of children who follow in their parents' footsteps to take over the family business is not regarded as a cultural norm today and many agency owners are contemplating the need to market their business for sale.
PREPARATION
These trends bring up numerous hurdles with data conversions and process integrations. Many established agencies are built upon legacy software platforms with outdated database configurations, aging client-side servers, and obsolete hardware. These challenges represent potential obstacles for prospective buyers considering the variables of either updating an acquisition to enhance its competitiveness or integrating into an established business.
Anyone considering shopping their agency for acquisition or merger should deeply consider the ROI of upgrading their operating software platform and potentially their hardware. This decision is a nominal investment to modernize by upgrading database formatting and preparing employees to integrate into a new environment with contemporary user interfaces and processes. Most importantly, the agency will be more attractive and consequently worth more to a buyer. Quicker integrations also provide a much shorter timeline to close a deal.
IN CLOSING
We are both witnessing and experiencing substantial upheaval and change in the third party debt collections market. Regulatory compliance measures have made operating expensive and complex, which exhausts a large component of small- and medium-sized agency ownership.
As Harry Strausser III writes in a recent Collection Advisor article titled, The Start of a New Chapter, "those who will survive, succeed and remain profitable are those willing to change." With change comes opportunity, so recognizing and preparing for those opportunities is the challenge. Market changes are out of your control, but how you react and change your business is entirely within your control. Be objective about who can help you prepare and choose your partner(s) carefully.
When considering software providers, look for the following checklist items:
- Secure, web-based platform
- SSAE16/SAS70 Statements of Auditing Standards
- FISMA, HIPAA, PCI DSS Compliance
- Open platform for third-party API integrations
- Single-page collector user interface
- Heavy automation to eliminate wasted time
- Integrated process compliance measures
- Multiple data export formats
- Account grouping capabilities
- Real-time performance dashboards
- Real-time client-access portals
- Scalable to grow with your organization
