About a month or so ago, I watched an excitable webcast that talked about all the collection agencies in Canada closing … so I reached out to some of the provincial registrars. And it’s true, I confirmed that over the last two years, Ontario has gone from just under 400 registered collection agencies to around 170. Over 50% are gone.
What happened to them?
Well, I think the pandemic had a lot to do with it – either it caused stresses on the businesses that they couldn’t handle, or it accelerated or amplified problems they were already having. So they either closed the doors, or amalgamated with another existing collection agency.
I’m making an educated guess here, but I am assuming the bulk of these agencies that disappeared were smaller companies – 10 employees or less. Companies that size probably relied on simple technologies, or had all their revenue tied up in a couple clients.
Imagine this – the pandemic hits, and your client calls you and tells you to stop working their business. That happened to us – we have a client that services mainly from restaurants and bars, so it’s understandable that they would want to hold off on collections, and that caused us some stress – but imagine if that was our main client, with 50%+ of our revenue coming from them? All sorts of creditors put the brakes on, and some still are telling their agencies to hold off.
Next, imagine having to move everyone to home. We were incredibly lucky that we built our own collection contact management software and phone servers and maintained them in house – we had complete control over our tools and knew how to set it up for remote work. Now imagine a business owner who is not tech-savvy trying to navigate the problem of working from home without knowing what a VPN connection is, how to set up a soft phone application, or find a way to communicate effectively daily with staff members sitting in their homes.
Lastly, take into account how important company culture is – this pandemic hasn’t been a short term disruption, we’re at 18 months now. That’s a long time to not see people face to face. If you didn’t have trust for your team members, or they hadn’t been encouraged to self-manage, I can only imagine the nightmare of trying to run a predictive dialer call-center style company with remote staff. Never mind the ongoing need for people to actually take pride or enjoyment out of their job, or have camaraderie with their co-workers or seek greener pastures elsewhere.
A lot of companies hit a brick wall with one or more of these issues, and are now gone.
What does that mean for the collection agencies that remain? Well, I can tell you there is a lot more business out there, creditors seeking new agencies to partner with, and regulators now open to the concept of staff working from home, even after this pandemic winds down.
But there are new challenges – talking to fellow agency owners all across Canada, hiring candidates is more challenging now with less applicants, and people less willing to change jobs with an uncertain future. Other agencies appear to be joining the 21st century with work from home, flexible schedules, and relying on team members to self manage. These are significant hurdles to navigate, and it’s going to take a while for agencies to find their feet, and creditors to understand the ramifications of these changes happening inside the companies of their agency partners.
What does the future hold? Change, and a lot of it. With less agencies out there to service clients, it’s possible that the race to the lowest bidder for contingency rates might be less prevalent, RFPs may have less bidders, and the fortunate agencies that remain can be more particular about which creditors to onboard with their agencies.
With remote work, experienced collection agents might change to working with another agency that isn’t geographically near them (or they may move to a more affordable area and keep their employment with companies in the big city). This also means that there needs to be a lot of trust for how a collector represents a creditor or agency, and won’t deviate from proper presentation of a debt.
This also means that outdated technologies, like off the shelf contact management software, PBX phone systems (don’t laugh, I know an agency that still has one of these), and in person meetings have to give way to new tools, and agencies need to be willing to embrace them.
Looking back, I’m incredibly grateful for some of the decisions we made pre-pandemic on how to run our business that has helped us weather the rocky ride.
Want to talk about work from home, maintaining culture, or what to do when half your industry players disappear? Always happy to chat….
Thanks kindly,
Blair DeMarco-Wettlaufer
KINGSTON Data & Credit
Cambridge, Ontario
blair@receivableaccounts.com
226-946-1730
No comments:
Post a Comment