- December 5, 2018
- Posted by: Phillip W. Duff
- Categories: Agencies, Jamaica, Nearshore call Centers, Reduce labor cost, Training, Uncategorized
YES! I can do it. Want to know how? It is very simple its by reducing your costs.
The biggest problems in the collection industry all stem from lower margins than the industry was founded on, much lower margins. As the industry has embraced the consumer friendly world of compliance and kinder collections the industry which was known for high risk and high rewards has turned the way of the Telemarketing industry, going from 50% margins, to working on volume for single digit profit margins today. Similar to that fall the collection industry is following a similar path. The consolidation of agencies and law firms has already happened and as the size of the providers increases the ability to react quickly and try new things diminishes and so so margins. Next the companies try to reduce costs by finding cheaper vendors and less expensive commercial space and then the reduction of high paid management staff begins. After all of this the owners are still making just single digit margins. How long can they survive as massive companies with massive bills on 5% profits? Limited lifespans will start to exist just like the telemarketing industry and then suddenly your replaced by a robocall.
So how do you increase margins?
We all first try to collect more money from the accounts already placed with us and that never works, in most cases it increases the liquidation and the margins together. So what’s left? The vendors and operational efficiencies. So how can I reduce your costs to increase your margins using just vendors and efficiencies it is easy. First you suck at creating efficient processes I know it I have made a living off that for 30 years as a consultant to the industry. But more so you just keep negotiating the same vendor contracts year after year when there must be a better way.
The better way, Margin Consulting.
Lighthouse Consulting has created relationships with vendors that can increase your efficiencies and profits due to the reduced cost over your current vendor web. By providing volume to the vendors they can reduce costs that can be shared across many agencies or firms. Increases from 5% margins to 12% margins have been seen and best of all there is no cost to you, we get paid out of the new margins for all our work.
And yes we know your thinking that you have to have XYZ do your letters or payment processing or asset location but do you? You think it won’t work with your software. Would increasing your profits by 100% be worth changing vendors? You tell me. call me at 904-687-1687 to discuss.