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28 Nov, 2008 11:38

Business jumps for collection agencies during crisis

Few sectors can claim to benefit from a tanking economy. The exception is collection agencies that help their clients deal with late-paying – or non-paying – customers.

The pressure to recover debt in a crisis is a golden opportunity for collection agencies. Sector players have portfolios growing faster than they expected, according to Nikolay Ivanov, Deputy Director, at USB Collector.

“In October, we managed to double our portfolio of individual's debt and triple our corporate accounts as the default rate mushrooms. Some of our clients' portfolios increased 8-fold last month.”

Before the crisis, the debt-collecting industry in Russia was growing at over 30 percent a year. Now it’s really taking off, experts say.

But for collectors to turn a profit, businesses and consumers should have some cash left to pay their bills.  Sequoia’s Aleksey Kozyrev says, since most agencies get paid after they collect their clients’ money, working under crisis conditions is more challenging.

“It's impossible to make a person pay if he or she doesn’t have any money. In a crisis, collecting agencies' portfolios may grow, but collecting becomes more difficult. Our profits depend on our ability to recover, and nowadays it is not as easy as it seems.”

So debt collectors are working harder – but a longer list of clients doesn’t necessarily spell profit.

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