It’s the invasion of the dot.com companies, and
commercial collections executives are welcoming the onslaught. The reason:
The proliferation of dot.com businesses is generating commercial accounts
that need collections services—providing a welcome, new source of revenue.
In fact, as the landscape for traditional third-party business collections
shifts toward more specialized services, dot.coms are becoming the newest
outsourcing clients for commercial agencies savvy enough to spot and land
their business.
Keeping up with the times, many commercial agencies are
providing customer relationship management services and beefing up their
knowledge about specific industries they serve—or hope to serve. And
increasingly, business collectors are expanding globally, offering their
services internationally. Other agencies are honing their competitive edge
in managing accounts for small- to medium-sized companies or working debt at
an earlier stage of delinquency.
But clearly outsourcing, coupled with the explosive
growth of the dot.coms, is providing commercial agency executives with
significant opportunities for growth. “Outsourcing continues to accelerate,”
says Forrest R. Old, vice president of marketing at Dun & Bradstreet
Receivable Management Services in Murray Hill, N.J. “Our own operation grew
50% last year and continues to move forward aggressively,” he says.
Others agree. The biggest trend, says David I. Herer,
president of ABC Companies Inc., “is the recognition by clients that the
traditional collections agency service—recovering third-party debt—is no
longer the most important service these agencies can provide.” The Buffalo,
N.Y.-based agency is experiencing a shift toward working outsourced accounts
for its clients. “Outsourcing is becoming more critical than traditional
debt collections,” Herer says.
A number of factors are driving businesses to outsource
their accounts. “The more sophisticated businesses who hire us, want to
stick to their core competencies and almost always that is not handling
receivables,” says James Bohmann, group president, commercial services, at
St. Louis-based Outsourcing Solutions Inc. The strong economy also is
forcing many companies to outsource because of the shortage of personnel
trained in collecting accounts. Often, new companies do not have anybody on
staff to make follow up calls 10 or 15 days after the bill is due, says
Michael Puckett, president of United Mercantile Agencies in Louisville, Ky.
Businesses, particularly new companies, are also wondering if it is
necessary to create or maintain collections offices when other companies are
already geared to perform those functions. Executives realize they can
invest resources in other areas that will create more revenue.