Receivable/Accounts - Information for Credit and Collection Issues

Friday, May 23, 2014

Breaking Into Our Industry

Breaking Into Our Industry

The credit and collections industry in Canada alone is huge, dealing with national clients, billions of dollars in receivables, employing tens of thousands of people – but it’s a very small industry, where all the key players know each other either firsthand or secondhand as business partners or competitors.  People fall into our industry, and for the most part stay in it for their entire career.  Over the years, collections executives move into key creditor roles, and vice versa, so competitors become clients, and it’s really apparent to me that after 25 years, it’s a small world after all.

One of the biggest unspoken challenges of breaking into the collections industry is not just understanding the laws, but knowing the landscape of our industry – the personalities, the trends, the established relationships, and the idiosyncrasies of the key players in our field. We do not just work with each other for a month or two, we establish relationships that last for years.

I’ve spoken quite a bit to newer entrepreneurs who are looking to be in collections, and I’d write down the following advice for everyone thinking of starting in our business.

You Do Not Work In A Vaccuum
This isn’t real estate, where your actions don’t impact your competitors.  If three major agencies have established their contingency rates at 18-20% for a specific industry, that’s the going rate, unless you can come up with a darn compelling reason to be outside the bracket.

Likewise, experienced people in our industry have seen the same thing over and over – personality types of collectors, RFP templates, extraneous fee schemes, software platforms, and so on.  It means that what might be a brilliant brand new idea to you is something dozens of people have tried beforehand.

You Need To Pay Your Dues
Some folks think they can hang their shingle out and within a few months be working for the top national clients – it doesn’t work that way.  You need to build your reputation, because you are the new kid on the block, and no one knows what you are capable of.  You either need to specialize in a specific industry group (medical, housing, legal, etc), or display you are different than the hundreds of other collection vendors in Canada before you will gain trust from your potential clients.

Our industry is fiercely competitive, and you need to find a way to stand out and be different.  You can do that by proving yourself on the tougher paper before it improves, and you can then scale up to the big creditors.  It’s not just about manpower either, by paying your due you can use that time to build in the bells and whistles that national clients look for, like national licensing, online payment options, sophisticated telephone systems, or ISO certification. 

Your Reputation Will Precede You

If you think that you can operate without being noticed, think again.  Odds are your new client was using another collection vendor before you came along, and on the bigger clients will use multiple collection vendors simultaneously.  It’s not just about adversarial competition – if you fail to perform for a national creditor, it will be noticed and remembered by all the players involved.  If you are not honest about your capabilities or functions, it will have swift consequences.  If you do not keep confidentiality when you should, you will quickly become a pariah.  Remember this, before you act or speak.
Because everyone has been here in the industry longer than you, you would be best to take some time to listen.  Attending a conference isn’t a chance to impress potential clients, it’s a chance to learn from the folks who have been around since they worked collection accounts on trays of index cards, with rotary phones.  They have survived in this challenging environment because they understand how things work, and you would learn a lot from them.

Your Clients Can Know More Than You

So you open your agency, and you call some local dentists, maybe a hospital, and you offer your services, and that’s fine.  But if you call a national cable company, not only are you ill prepared to work their accounts with your new company, odds are pretty darn good the credit executive you are calling has spent years cutting their teeth in the collections industry, and has far more experience more than you.  So how are you going to impress them and convince them to use your company?

If you spend some time paying your dues and listening, you’ll quickly know who knows who, and where they’ve been.  Linkedin is also a great tool for doing some fact-finding.  Also keep in mind that everyone in our industry has their own style and preferences, so remember that when you speak to them.

Our Industry Is Changing

The credit and collections industry is far from stagnant.  Not only do you need to catch up on decades of history and relationships, you need to stay on top of all the changes and evolution that is happening on an ongoing basis.  If you don’t know the newest laws, or tools available, you may be finished before you started.

I certainly don’t mean to provide an intimidating list of impossible goals to scare off new entrepreneurs from opening their own collection operations – I’m a huge proponent that there is enough new business for everyone, and something else is changing that’s worth noting: the key players in our industry, especially in the collection agency sphere in Canada are getting older.  Most will have retired or passed on their responsibilities over the next five to ten years.  We as an industry are not horribly open to grooming successors or passing on our knowledge, but we should definitely welcome new people, as new blood and fresh ideas are what will be good for credit and collections. 

If you are looking to ‘break in’ to our industry, I not only wish you the best, I’m certainly willing to help if I can.  While it’s a tough business, it’s certainly rewarding.  You may have some brilliant idea that will revolutionize the way we do business, or you might bring some skills from another industry that will make things better for you, and teach us.  If you want to be pointed towards useful conferences or mentors in collections, I’ll happily share what I know. 

Thanks kindly,

Blair DeMarco-Wettlaufer
Kingston Data and Credit
Cambridge, Ontario