Collector – January 2020 - 40

BUSINESSOPERATIONS

collection model, a well-run collection
agency should throw off a 15% to 20%
EBITDA margin. New entrants are testing
the proposition that if you reduce head
count and automate certain functions
through tech-enabled solutions, couldn't
margins go above 20% to 30%?
New tech-enabled entrants are also
asking why so many phone calls are being
made to a delinquent consumer base,
because tech-enabled solutions can be more
effective when that account is charged off or
is in the process of being charged off.
Tech-enabled entrants are challenging
the status quo. Why isn't technology used
before call-and-collect? Why is calling
primary and technology secondary? New
entrants want to evolve the business model
as quickly as possible to change the margin
profile of the collections business. As noted
earlier, margins could increase above 20%
to 30% EBITDA on average by replacing
headcount with tech-enabled solutions. It

becomes a much different valuation game,
as well, when shopping a business to new
owners or investors.
What should legacy collection companies
do to counter the threat posed by techenabled new entrants?
Just because the Consumer Financial
Protection Bureau rulemaking has not yet
caught up to the reality of where the ARM
industry is, this is no reason to operate
the same way you have been for the past
20 years. Evolve and start looking into
technologies that can transform and drive
higher margins in your business versus
just assuming the regulatory environment
is the way it is and won't change. Owners
and operators in mature businesses must be
open to technology shifts. The old way of
doing things isn't always optimal.
At the same time, new solutions must
always be challenged. Some of the new
technologies will fit right into the ARM
industry's sweet spot, while others won't.

Some new entrants will take significant
positions in technologies that won't
necessarily move the valuation needle. They
are making a bet to determine what will and
won't fit the industry. That is the challenge
as they select new technologies and try to
strike the right balance between new and
legacy processes.
Significant opportunity is available to
startups. During the next few years, more
startup companies will enter the collection
space in which technology is first, and the
call-and-collect model is secondary.
Michael Lamm is managing partner at
Corporate Advisory Solutions (www.
corpadvisorysolutions.com), a boutique
merchant bank with offices in Philadelphia
and Washington, D.C. Lamm hosts the
ACA Cast podcast series Leadership Fuel
With Michael Lamm. He can be reached at
mlamm@corpadvisorysolutions.com or
(202) 904-7192.

Calling All Writers!

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Collector magazine invites credit and collection professionals of all levels into a community of
experts who share their hard-won experience through in-depth process and data-driven articles.
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Collector – January 2020

Table of Contents for the Digital Edition of Collector – January 2020

Upfront
Industry News
Best Practices
FYI
Collection Tips
Radical Redesigns
Four State Legislative Trends to Watch
Calendar
Honor Roll
Education Spotlight
Our International Reach
Tech Times are Changing
Exceptional Programming and Speakers Pay Off
Looking Forward to Monday Morning
Contextualizing Consumer Complaints
Another Look at Written Disputes
ACA SearchPoint
Ad Index
Membership
Last Word
Collector – January 2020 - Cover1
Collector – January 2020 - Cover2
Collector – January 2020 - 1
Collector – January 2020 - 2
Collector – January 2020 - 3
Collector – January 2020 - Upfront
Collector – January 2020 - 5
Collector – January 2020 - Industry News
Collector – January 2020 - 7
Collector – January 2020 - 8
Collector – January 2020 - 9
Collector – January 2020 - 10
Collector – January 2020 - 11
Collector – January 2020 - Best Practices
Collector – January 2020 - 13
Collector – January 2020 - FYI
Collector – January 2020 - 15
Collector – January 2020 - Collection Tips
Collector – January 2020 - 17
Collector – January 2020 - 18
Collector – January 2020 - 19
Collector – January 2020 - 20
Collector – January 2020 - 21
Collector – January 2020 - 22
Collector – January 2020 - 23
Collector – January 2020 - Radical Redesigns
Collector – January 2020 - 25
Collector – January 2020 - 26
Collector – January 2020 - 27
Collector – January 2020 - Four State Legislative Trends to Watch
Collector – January 2020 - 29
Collector – January 2020 - 30
Collector – January 2020 - 31
Collector – January 2020 - Calendar
Collector – January 2020 - Honor Roll
Collector – January 2020 - Education Spotlight
Collector – January 2020 - 35
Collector – January 2020 - Our International Reach
Collector – January 2020 - 37
Collector – January 2020 - Tech Times are Changing
Collector – January 2020 - 39
Collector – January 2020 - 40
Collector – January 2020 - 41
Collector – January 2020 - Exceptional Programming and Speakers Pay Off
Collector – January 2020 - 43
Collector – January 2020 - 44
Collector – January 2020 - Looking Forward to Monday Morning
Collector – January 2020 - Contextualizing Consumer Complaints
Collector – January 2020 - 47
Collector – January 2020 - 48
Collector – January 2020 - 49
Collector – January 2020 - Another Look at Written Disputes
Collector – January 2020 - 51
Collector – January 2020 - ACA SearchPoint
Collector – January 2020 - Ad Index
Collector – January 2020 - Membership
Collector – January 2020 - 55
Collector – January 2020 - Last Word
Collector – January 2020 - Cover3
Collector – January 2020 - Cover4
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