Tavelli Co., Inc. - Jul 23, 2024
The Surprising Truth Behind the Accounts Receivable Management Industry
The State of the Industry
In the business sector, much like in life, a delicate equilibrium prevails. When businesses face new costs or need to write off bad debt, these financial burdens often translate into higher operational expenses. Consequently, prices for goods and services inflate, in many cases passing the increased cost on to customers. While an economics degree isn’t necessary to grasp this concept, it’s essential to recognize that persistent debt accumulation by businesses ultimately contributes to rising costs. Especially when this pertains to small businesses.
The Kaulkin Ginsberg 2020 State of the Industry Report
Key Summarized Findings:
- Creditors placed roughly 1.6 billion accounts with ARM firms. The aggregate face value was nearly $923.1 billion, representing an average account balance of $574.
- ARM firms collected nearly $102.6 billion in debt, with a recovery rate of 11.1% of face value.
- Total net debt returned to creditors amounted to nearly $90.1 billion.
- This represents roughly $706 in savings per household.
- The ARM industry employed around 124,400 – including payroll employees and owners. Total compensation, which combines aggregate payroll, amounted to almost $5 billion.
- ARM firms contributed an estimated $108.3 million to charity.
- ARM employees offered roughly 524,000 hours of their time to volunteering – including 229,800 hours for company-sponsored activities.
- ARM companies and their employees paid roughly $1.1 billion in federal taxes and $105.9 million in state and local taxes.
Remarkably, a lesser-known contributor to cost savings lies within the collection space. Contrary to common perception, Accounts Receivable Management (ARM) firms play a pivotal role in reducing expenses. According to a 2020 industry report, these firms achieved an average savings of $706 per household. Their strategic efforts in managing receivables have a direct impact on financial efficiency, benefiting both businesses and consumers.
Collection agencies actually play a complex and important role in the national and state level financial ecosystems. They assist in recovering outstanding debts, ensuring financial stability for creditors, and facilitating economic activity. Agencies act as intermediaries between creditors and debtors, helping companies as well as individuals sort out the complexities of debt recovery. For this reason, while collection agencies are often maligned and seem to be mostly spoken of in negative contexts, it is important to note that they are often one of the greatest tools used in maintaining a healthy credit system. In America, the credit system is set up in a way so that lenders can evaluate risk when lending money to consumers. Credit worthiness is something that creditors must take into account when taking into consideration the likelihood that a loan, services, or goods will be paid for in the long run.
In recent years, both in my household and our community, the spider population has steadily increased. Ironically, after years of successfully eliminating spiders from our home, we now face a different issue: an influx of other bugs and insects. The lesson– often short-term solutions or quick fixes lead to a rise in new problems. Similarly, in the financial sector, we might be heading toward a comparable situation in striking the right balance or maintaining some semblance of equilibrium. When consumers aren’t required to pay for goods or services provided to them, then the creditor incurs the cost, it is passed on to the next consumer via the price of goods, or the government has to step in, possibly leading to an indirect increased burden on the tax base. In other words, if businesses are forced to write off bad debt each year, the problem doesn’t simply go away. This is where collection agencies step in.
The State of our Company
At Tavelli Co., our primary focus is maintaining our clients’ brand and relationships through exceptional communication experiences over the phone. Our desire is to embody the warmth and friendliness similar to the receptionist at your childhood dentist’s office, rather than the impersonal atmosphere of a gloomy call center. Meanwhile striking a balanced approach of seeking to make sure our clients are paid for any services rendered or goods sold. We intentionally hire call agents who can deliver this personalized experience, which is likely why many of our clients come to us through referrals, and nearly all our clients stay. This may also be the reason why our business continues to rapidly grow.
Though through no accident, we have been fortunate to build an incredibly strong team. We pride ourselves on being different and similar to a fast-food drive-thru, where the question is, “What do you want?” rather than the more customer-centric, “How can I serve you today?” As a San Rafael debt collection agency, we take the hospitable approach—one that ensures our clients’ peace of mind. We thoroughly work accounts, and don’t simply operate on increased volume and low-quality service, which can seem so enticing in the industry. Our exceptional and well-trained staff, combined with our industry-leading experience, allows us to navigate the intricacies of current laws and regulations. By minimizing risk and maintaining our clients’ brand integrity, we continue to thrive.
If you or your company are interested in partnering with us, if you are looking for an Accounts Receivable Management team that will protect your brand and reputation, this is where our agency excels! We are seeing compliments toward our staff flow in almost every week, sometimes daily, and we believe we could be a complement to your business as well! Contact us today at (707) 509-5565 if you are seeking a collection agency in San Rafael, Sonoma County, and all Northern California!
Tavelli Co., Inc. has over 40 years of unparalleled experience in the debt collection and receivables management industry. Our mission is to achieve the right balance between getting clients paid and being empathetic to debtor circumstances, through implementing innovative practices, hiring experienced people, and improving business decisions through analytics. We provide peace of mind to all involved by collecting money with no complaints. Tavelli Co., Inc. takes the time to carefully listen to your customers and share their feedback with you through meaningful data and transparent communication, so you have access to the information you need to make quality decisions and improve your processes in the future. Contact us today and let the debt collection experts at Tavelli Co., Inc. help you set your business up for success.
IMPORTANT: Information provided by Tavelli Co., Inc., any employees of Tavelli Co., Inc., or its subsidiaries is not intended as legal advice and may not be used as legal advice. It is not intended to be a full and exhaustive explanation of the law in any area, nor should it be used to replace the advice of your own legal counsel.
