Collector - October 2020 - 52

LASTWORD

What's Happening Upstream?
This interview is an excerpt from a recent episode of the ACA Huddle discussing accounts receivable management
industry trends and the outlook for 2021.

I

n her introduction to this recent episode
of the ACA Huddle, ACA International's
Director of Education Kelli Krueger noted
that we spend most of our time reacting to
problems downstream rather than dealing
with the source of the problems upstream.
Here, Tim Haag, president, State Collection
Service; Mark Groves, managing member,
Glasser and Glasser; and G. Scott Purcell,
president of Professional Credit, share their
perspectives on current trends they're seeing
upstream. This is an edited excerpt from the
conversation.
Groves: Many over at the National
Creditors Bar Association were predicting
that given the court closures, client
moratoriums and the issue of social
distancing at work, we'd be facing around a
50% decline in revenue to budget by August.
Fortunately for many of us, the initial
forecasts were wrong, and we underweighted
the impact of the strong and overwhelming
fiscal support from government and a
resilient household balance sheet. In fact, so
far, our voluntary payments, payment plans
and individual payments are performing
much better than expected. There are two
factors that I would offer as evidence that
the almighty consumer remains resilient
and all phases of collections will continue
with a relatively soft economic landing in
2020 followed by a nearly limitless upside
beginning in 2021.
The first reason is there continues to
be a dramatic and apparently unending
appetite for governmental intervention
and fiscal stimulus, which in large measure
will be used to pay down debt. Personal
and household balance sheets remain well
above average conditions considering we're
at an 11% unemployment rate and we've

52

endured a global recession. Unbelievably,
total charge-offs remain relatively unchanged
in the consumer financial services vertical
from Q1 in 2020 compared to the same time
last year. We're at 11% unemployment and
charge-offs are relatively flat? That tells you a
lot about the fiscal stimulus.
The second reason is that creditors and
debt collectors have acted with a great
deal of empathy and have accommodated
what needs to be done to support the
community and families on the return to
normal. Between foreclosure and eviction
postponements, utility bill relief, court fines
and fees relief, delayed taxes, medical service
waivers of certain bills, including COVID-19
treatment and testing, I know I can speak
for ACA members that we are all working
our butts off trying to identify individual
consumers who have issues and going the
distance with them through all this.
All these factors indicate that consumer
debt collection for agencies will continue to
do very well while those working through
the court system reopenings and delays, such
as our firm, will face headwinds due to the
constrains and challenges of the courts.
Purcell: Our nonlegal money continues to
be up week after week over the last year, and
just as you said it's all voluntary payments.
Professor Richard Thaler, who won the Nobel
Prize in 2017 in economics, found that people
want to be in control of their household
finances and financial future. They want to
make those decisions about savings and paying
down debt. Not only did the government step
in [to help consumers] but the forbearances,
both voluntary and government mandated,
provided a huge amount of liquidity and
continue to. And I think that's something all
of us need to watch, where those forbearance

policies go, because that will have an impact on
consumers' liquidity.
Haag: On the flip side, we are 100% health
care so we've seen listings dramatically drop,
specifically on first-party work. We haven't
seen it drop so much on the bad debt side,
but we anticipate that. There's no doubt early
on the stimulus money and the benefits from
government did help for the short term but
there's only so long that that government
assistance can help us out. So, looking
into 2021, that's the uncertainty part. How
quickly will people get back to work? How
quickly will people get back to having health
insurance and things of that nature? I think
between now and the end of the first quarter
things should look OK, but after that there
are a lot of unknowns, in my opinion.
To listen to the complete interview, visit
www.acainternational.org/products/thehuddle-7-29-2020.

Title: Clients, Congress and the
Consumer
Participants: Tim Haag,
president, State Collection
Service; Mark Groves, managing
member, Glasser and Glasser;
G. Scott Purcell, president of
Professional Credit
Air date: 7/29/2020

ACAINTERNATIONAL.ORG


http://www.acainternational.org/products/the-huddle-7-29-2020 http://www.acainternational.org/products/the-huddle-7-29-2020 http://www.ACAINTERNATIONAL.ORG

Collector - October 2020

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