ELFA survey on collection

The Equipment Leasing and Finance Association (ELFA) has released details of its 2016 Collections Effectiveness Survey, the seventh year the association has provided in-depth research in this area.

PayNet, one of the survey’s organisers, forecasts an overall increase in defaults in 2016, with specific industries such as transportation, mining, information and construction leading the way. While 2016 defaults are expected to reach a peak since the recession, PayNet’s analysis forecasts that defaults will decline slightly in 2017.

The survey, based on input from association members and other professional advisers, indicates that in 2015, 31-90 day delinquencies increased, but recovered before the more-than-90 day mark.

Banks showed a low 31-90 day delinquency rate and no delinquencies beyond 90 days. Independents showed a higher 31-90 day delinquency rate, but again significantly reduced that by the more-than-90 day mark.

When asked to predict what would happen with their company’s delinquencies over the next 12 months, 53% of respondents to the survey expected them to get worse, 38% forecast they would stay the same and 9% thought they would get better. Forecasts for charge-off rates were broadly similar.

Only 41% of the survey respondents felt that third-party collection agencies are effective, although the majority also reported increased difficulty in hiring experienced staff in-house.

As regards changes of approach to collecting, when asked if they use texting in their collections efforts, 22% of respondents said yes, while 78% said they did not. Among those who reported using texting, most felt that it is effective, as while some debtors do not want to take a call from a collector, they will text.

ELFA said it expects texting to be utilized more going forward, and predicted this move is likely to result in new rules needing to be put in place.

ELFA’s next Credit and Collections Management Conference will be held June 4-6, 2017, at the Hyatt Regency Baltimore Inner Harbor.