Conventional wisdom, even from Fed Chairman Jerome Powell is that we are likely in a recession. How deep and how long a recession we may experience is unknown, and anyone who claims they do know is simply guessing.
People keep asking me, “A recession is good for your collection agency, right?” The answer is a resounding no. Contrary to what you may believe, collection agencies, especially small business agencies like ours, do not prey on people – in any economy. We do not delight in the misfortunes of others. We are a working in the middle of our clients and those who owe them money. We are working to keep our small business customers able to provide their products and services by recovering money owed to them.
If people are not working, they use whatever income they have to pay current bills. Not everyone will be unemployed or struggling. We have no way to determine which people pay until we contact them.
However, making contact with people, and listening will help us determine what we are up against. The truth is that most people sent to collections want to pay. They just cannot pay at the time, or do not understand they owe.
Even now, in these uncertain times, we are talking with people. If they have lost their jobs, we put their account on hold. We are offering payment plans and waiving interest and fees where we can. We do not report debts to credit bureaus. We do not execute legal judgments (garnishments, etc).
We find that people are very open to discussing the money they owe, and willing to work out a plan to pay in the future. My partner says that we are “making friends” by treating people with respect, while all the while still delivering results to our customers.
We encourage our small business clients to use this time to review their accounts receivable and institute or revise their plan to manage them. We advise them to use this time to strengthen their credit practices and to review their customer contracts.
We are taking a long term view and taking it day by day, doing our part to keep the economy going.
