Municipalities, Short on Cash, Partner With Collection Agencies

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July 10, 2014 by Lisa Brammer

A tough economy and continual budget cuts have both large and small municipalities across the country partnering with collection agencies in an effort to fill the holes left in their budgets caused by reduced revenue.

Each year, third-party collection agencies recover tens of billions of dollars of consumer debt. In order to provide a more complete picture of the importance debt collection agencies have on our economy, ACA International, the Association of Credit and Collection Professionals, commissioned Ernst and Young to conduct a survey. This 2011 study, The Impact of Third-Party Debt Collection on the National and State Economies, revealed that in 2010 alone, agencies recovered almost $55 billion in total debt, and returned nearly $45 billion to client creditors (in Wisconsin, $647 million was collected and $539.4 million returned).

According to the survey, health care related debt was the primary type of debt collected and accounted for more than 50% of all debt collected in the industry. Government debt made up about 2.1% which equated to more than $1 billion collected.

As a result of decreasing revenue and increasing budgetary pressure, more governmental entities are turning to the expertise collection agencies provide in recovering their unpaid fines, fees, utility bills, and taxes.  The collection agency is able to efficiently increase government revenue and alleviate budgetary pressure by recouping: unpaid parking tickets, red light camera violations, ordinance violations, building code fees, alarm fees, utility and garbage removal bills, municipal fees and court fines.  Consequently, governmental collections is a growing market segment in the accounts receivable management industry.

Collecting government debt is a good fit for the collection industry, especially with those agencies familiar with health care debt.  Both types require a combination of tenacity and tact. A good, reputable collection agency understands there’s more to the process than collecting money like the importance of a positive consumer experience and your reputation.

Partnering with a reputable third-party collection agency can be a very viable solution when looking for ways to fill the gaps in the budget. It’s a great way to boost revenue that doesn’t involve service cut-backs, raising taxes or fee increases.

Founded in 1950, United Credit Service, Inc. is a full service revenue cycle management and debt collection agency in Wisconsin providing highly effective, customized one on one management and recovery solutions for our business partners. We offer pre-service collection solutions as well as traditional back-end collections. Visit our website at http://www.unitedcreditservice.com or call 877-723-2902.

 

 

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