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Identifying worthwhile new collection markets

Almost every week we hear about the establishment of a new collection firm, which makes me wonder from where they are getting their business. With the competition already very tight and commission rates on the decline in well-established markets, finding collection business in new industries appears to be an important strategy to consider.

Research the Specifics

In looking at a new industry, the importance of researching as much pertinent information as possible can't be overstated. This would include:
  • Confirming the number of companies in the industry, growth history and forecasted potential
  • Obtaining and analyzing industry accounts receivable and trade data trends that would indicate A/R turnover, industry payment terms, estimated delinquencies and write-offs
Some industries, such as the senior health equipment market, partially rely on a flow of payments coming through private and governmental insurance programs. Others, such as the emerging cannabis market, may have legal issues from state to state that can impact the validity of a sale. Each industry comes with a unique set of circumstances that will frame its business cycle and any resulting claims.

Plan the Approach

Once you have identified a market worth pursuing, your next step is to focus on which companies would be your target in terms of employee size, revenues, territory and other important parameters. This could be obtained from the industry’s professional association member directories or from social media platforms. In particular, LinkedIn can assist you in locating the best person to contact. Depending on the company’s size, the right person might be anyone from the president down to the credit manager.

With many new industries emerging and developing in this ever-changing world, there seems to always be the potential to find a new business opportunity.

Christopher J. Pona
Manager, Business Development more

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