Do you have a culture of accountability, clear purpose and the pursuit of profits?

As a consultant to the ARM industry I see the lack of these things in almost every agency and law firm I visit.  Most of the managers that I am ask to work with do not create a CLEAR structure for the staff to follow, and when there is a breakdown in the process there is no CLEAR accountability.  Very few collection shops are built on a profit-based business model.  They instead have the same old model that provides whatever profits it provides which is why so many operators are complaining about their reduced profit margins.

Many firms have multiple people responsible for the same things, so when something goes wrong there is no clear chain of responsibility and accountability, and therefore, no obvious way to isolate the person or persons accountable in order to implement and effective way to train better to avoid the problem again. If you run a shop of accountability then the fault clearly lands on someone’s plate and then solutions are more clearly defined and enacted. When the entire office misses goal; who do you blame?  But if you have several KPI’s defined and the entire team misses goals, but 7 of the 10 KPI’s were hit, the contributing factors to missing the goals can be identified and isolated and the individuals or department responsible can be retrained to prevent a similar occurrence next month.

The truth is you can have whatever level of profit margins you desire if you build the right collection process and can locate the right type of business capable of delivering those profit margins. OK…if  you don’t believe, me look at it this way.  If you say I need a 20% profit margin and have a collection process that is accountable and traceable, all you need are placements that can provide that profit margin within your defined process.  Now you say this 20% business does not exist, well maybe not much these days can provide a 20% profit margins after all costs are accounted for but you see the point.

The problem with the old process of collections is that it is not based on a profit quotient; it is merely a tradition that has been carried on from days when profit margins were 40%.  This is the philosophy, “We’ve always done it this way, so we should always do it this way.”  In the past, we incented the collectors to collect more, as that is what drove profits.  Now we have more costs buckets to consider than years past. The cost of consumer lawyers, skiptracing, technology, asset location, licenses, dialers, marketing and more that has all changed over the years.  Profits now come from controlling expenses!

If you want to focus various collectors groups on profits, then set them up as a small business within your business. Give the unit manager a budget for skip, letters and payroll and then determine the overall costs he faces with overhead.  It’s a cost per seat equation;

Total costs divided by

Total number of FT revenue makers= Cost per seat

So if you have a group of 10 collectors and one manager, and the cost per seat is $5,000.00 monthly, and you desire 20% profits the group must collect $55,000 in gross fees to cover expenses and another $11,000 for the 20% profits. Once the group has reached the $66K mark the owner has his profits of 20% and is in bonus mode. Now the owner has taught the manager how to use costs and profits to run the company. The owner can reward that staff for overachieving by sharing the overage at a high percentage maybe even 50/50.

This not only teaches the staff to work based on budgets and a fixed cost but encourages profits not just production. If you need help creating a culture of accountability, purpose and profits call Lighthouse Consulting LLC.

Are You Teachable? If not, Then Learn How To Be Teachable Here

As a consultant serving CEO’s in the ARM industry for the past decade, I have learned that most CEO types are not very trainable. The ones that are trainable, and embrace new ideas and new processes, are clearly leading the industry.

I have dealt with many “Collector Kings” in my career when I was an owner or manger of collections agencies, but the level of “I Know It All” in the C-Suite is astounding.  I do realize the owner/manager needs to act and carry him or herself confidently, but many will not listen to new advice from their staff, or entertain progressive processes and most shun away any type of change in general.

So how do you make sure are teachable and trainable? It’s only done by embracing change and learning! Now if you are one that does not like change (80% of the population) then you will have to create a plan and follow it.  Now you are asking “What kind of plan? I don’t like change or new stuff plus I am too busy being stagnant to learn new stuff.  No thanks!” The biggest excuse is I am too busy to _____. This is just that, an excuse to stay stagnant and to avoid change.

If you are still reading you are on the road to recovery.

To become trainable try these simple tips:

→    Set aside 3 times a year to attend training classes. Not the sessions you attend at the ACA or DBA but something you would not normally attend such as;

♦      Excel class

♦      Chrystal reports

♦      Collection Software classes

♦      Sales training

♦      Customer service seminar

♦     ACA fly in

♦      DBA retreat

♦      Motivational seminars (Success 2012)

→    Read, Read and Read. Read the industry sites like Inside ARM and browse LinkedIn for articles daily.  Also encourage your staff to do so by providing access to these sites in the office and pointing them to good articles found there.  But also read business books or use audible versions (this is my preference).  Have a library of books available to your staff like;

♦      Good To Great

♦      Art of War

♦      Fish

♦      Delivering Happiness

♦      Great by Choice

♦      Fred Factor

♦      The Zappos Experience

♦      Drive

♦      The Tipping Point

→    Listen! Learn to listen to your staff, have town meetings and allow the staff to make suggestions for improvements and listen to them. Listening is especially hard for the successful CEO, so try hard to hear the message that the staff is sending.

If you need help with these tasks then you should get a mentor or join a group like Young Presidents or Vistage.  Lighthouse Consulting LLC has been helping ARM companies unlock profits that are being concealed by meager operating practices and procedures and overlooked opportunities.  Call us for more info at 904-687-1687 or contact Phillip W. Duff at

Do You Have a Strategic Plan for 2014? Have you shared it with the staff?

In order to be successful you must have a plan. Many CEOs have a plan but it is only in their mind.  They have not committed it to paper or shared it with the rest of the staff.  If you don’t share it with your staff how do you expect the staff to help you achieve the goals you have set for the organization?  For the past decade, I have been helping clients of Lighthouse Consulting to make strategic decisions, document them, share with the staff and get buy-in from the staff.


One of the key mistakes many leaders make is not sharing there vision with the staff. The problem arises because the leader is concerned that if he or she states the overall goals, and they are not met, it will not only affect the staff but their image of management. Many years ago I created a success dashboard as seen here. It is important to discuss and agree on the factors stated there. Core Values lead to Core Purpose and a  clear understanding of your Core Purpose can drive your organization to excellence.

Ultimately, you’re not a leader if no one is following. Exceptional leadership requires a climate of trust where people give you their wholehearted commitment. In order to do this they must understand and trust the plan.

Great leaders are defined by a clear sense of purpose and they rally others around to promote that purpose. Vision involves having a clear picture of a meaningful future that you are committed to and passionate about creating. Once a Vision is created, then a plan must be made in order to reach the goals. Ultimately, leadership is about taking people somewhere and accomplishing something.

Most great leaders will tell you they did not do it alone.  Rather, it took their staff, consultants, training and a clear plan. Lighthouse Consulting has been helping its client base to make strategic decisions and implement effective operations plans since 2003.  If you want assistance creating your success dashboard contact us today.

How the ARM Industry in 2014 is like High Stakes Poker in Las Vegas

As the ARM industry begins to consolidate and evolve as a result of a new regulatory paradigm, so do the businesses involved in debt purchasing and debt collection.  As a consultant, debt broker and M&A consultant for the ARM industry I see many collection agencies and law firms in both their best and worst of times.  Often as a consultant I am engaged and when things are not going well and as a debt broker the opposite is usually the case.  When I am doing mergers or acquisitions usually there is someone with a large stack of chips and performing at the top of their game and someone on the other side with a few chips left.

Historically the collection industry has always been an industry that has ebbed and flowed based on inventory levels.  When a collection agency or law firm was able to get a large amount of quality placements they would be at a high with lots of chips sitting in front of them.  Conversely, when the chips in front of you or your placements are low, the business becomes more challenging and less profitable.  The one thing I have consistently noticed over the years is the businesses that were willing to spend their chips on performance enhancements would gain market share and therefore a larger stack of chips.

Until a few years ago the collection business was based upon only two factors; your ability to perform and your ability to provide an ever growing pool of placements. With the onset of onerous levels of regulation, the business has changed again and taken many of the chips off the table, even for the most established and profitable firms in the market.  As issuers and debt buyers reduce the amount of placements available to the market, there are less poker games and fewer chips available. This is what will drive the consolidation and evolution of the industry in 2014.

In a market of tight supply, the players remaining will need to be more strategic about how they go about amassing chips in front of them.  In this environment, there is a need to change the business model in order to succeed.

The game has changed and it now it now favors the bigger players with deeper pockets that can satisfy the needs of the issuers and debt buyers. These stakeholders want the players to be able to handle the intense regulatory scrutiny in today’s marketplace which requires a significant stack of chips and a higher ante into the game.  The stakes are much higher and the cost of entry has also increased but the payoffs scream for the effort to be made.

The small guy who is selling his business to the guy with lots of chips will increase his chip share while the buyer will reduce their stack.  The hope is by combining forces they will be a stronger partner and able to survive the ups and downs of the game. The business will truly fluctuate just like your chips at the Las Vegas poker table and just like the poker table the trick is to be strategic with your moves and know when to fold ‘em and cash out.

If you are looking to increase the chips in front of your business then call Lighthouse Consulting for some inside tips. We will be able to help you make the strategic moves that will allow you to end up with the biggest stack of chips.

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Lighthouse Consulting has been providing solutions to operational compliance challenges and M&A consulting for ARM companies for over a decade. Contact Phillip Duff, CEO of Lighthouse Consulting today and let us help you navigate the compliance landscape.

Phillip Duff, CEO | | | (904) 687-1687

Will the CFPB Get Rid of The Consumer Lawyers?

The CFPB and the consumer lawyers are on the same side.  They’re both fighting the same battle the question is who will win?

The Consumer Financial Protection Bureau is there to protect the consumer from bad actors that offer financial products. They state Our mission is to make markets for consumer financial products and services work for Americans — whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products.”

The consumer lawyers state a similar goal. “National Consumer Law Center (NCLC) has worked on the most urgent problems affecting families in financial distress. NCLC is at the forefront in the fight for economic justice. Our work stops unfair and predatory business practices that affect millions of people across the nation.” – See more at:

So it begs the question who will win?  Of course the first thing would be that both would combine forces but that’s not going to work as the lawyers are small businesses throughout the United States and the government is, well…the government.

The CFPB is very well-funded and would seem to be the dominant force. Let’s pretend that they are able to complete their mission and make sure that all consumers are safe when applying for a mortgage, choosing among credit cards, are using any number of consumer financial products. This would leave no need for the consumer lawyers in the financial space. They would have to go back to working consumer product liability cases such as poorly made baby cribs or automobile recalls (ala Ralph Nader).

How would that affect the ARM industry? What’s the cost of absolute compliance to the CFPB? These are interesting questions to which I do not have the answer. Only time will be able to tell us what the effects of the CFPB will be. I do know that we are just beginning to see what the affects are of the work that is currently being done by the agency. Most of the “Churn” going on in the industry today is actually knee-jerk reactions to directives from the agency by agencies and debt buyers in an effort to reduce risk across the board.  When industries go through this type of paradigm shift in regulatory oversight, many times the pendulum swings too far in one direction.

It’s very obvious that compliance will be a large portion of any collection agency or law firm’s budget in the future. The players that are able to understand and embrace the future by creating, purchasing and using compliance tools and technology will be able to be a big part of that future. Whether it is process driven compliance, technology driven compliance or good old-fashioned training,  the future is compliant, compassionate collections.

The CFPB and the consumer lawyers are both on the same side and so is the ARM industry in 2014. This is the reality that we must all face; regulation is now in charge of the industry and we must comply as business owners and operators. Since many of the regulations are directed towards the people performing the work, i.e. the debt collectors, the CFPB is actually attacking your business strategy. You must learn to create a new business model based upon the new marketplace in order to succeed in 2014.

Don’t let the ever-changing marketplace overrun your business model contact Lighthouse Consulting for a free online evaluation of your collection agency our law firm at 904-687-1687.

Don’t miss this informative session at the Upcoming National Collections & Operational Risk Conference, March 24-26, Miami, FL


Michael Thurman Partner, LOEB & LOEB LLP

Tuesday March 25, 2014  |  3:45 – 4:30 PM