Our success has been achieved by combining an understanding the vendor clients from whom we purchase portfolios; from understanding our customers, so we can come to the best solution to resolve their debt problems; and it comes from understanding what’s happening in the market – so we tailor our business to prevailing conditions.
At present, prevailing conditions means dealing with any fallout from the credit crunch - which originally had its roots in the sub-prime mortgage crisis and has contributed to falling property prices, a slowdown in the US economy, and major losses by banks around the world. The statement still holds true that when the US sneezes other economies catch a cold - so what happens on that side of the Atlantic is likely to impact the economy in the UK.
However, any consequences emanating from the tightening of credit do not mean that the time has come to batten down the hatches and either ignore or sit out the troubles. It is far more constructive to open up to our vendors – and even competitors. I believe our business works best when we inform our institutional vendor clients how well we’re performing, or not – and share data to evidence collection curves, and costs involved in processing various strategies, drilled down to account level. There are not many other businesses that have this transparency of relationship with their clients, but for us it’s very important. It demonstrates that we are committed to working with them, and delivers the message that we have nothing to hide in the way that we work.
We also share market and competitor information – and often that is reciprocated. Having accurate market data to hand can help us all to see trends developing – whether rising repossession rates or current levels of consumer debt, average arrears statistics and so forth. Importantly, it can assist in the formulation of structured decisions, rather than knee-jerk reactions at a later date.
Even though we are now a multi-billion pound Industry, we are still relatively small in the grand scale of things, hence it is important to work well alongside our major competitors – friendly rivalry, rather than aggressive struggles. There is mutual benefit in keeping each other informed about challenges in the market – and in some circumstances cooperating on business opportunities. We, with other key companies and the CSA, try to work together to maintain a good name for the industry as a whole – a name that has too often been tarnished by companies not upholding the highest ethical standards that so many of us have worked tirelessly to adhere to.
We’re all part of a larger wheel and if one cog falters, we can all suffer as a result. Better to work together to keep the machine well oiled.
One area that I think could be enhanced is in the way in which we operate with intermediaries – and this goes to the heart of working transparently. To some extent they have succeeded in depersonalising relationships between debt purchasers and the institutions. It means that banks, for example, can push responsibility down to the intermediary to get the best price, rather than make the decision themselves. They can use it to shield themselves – and call it reputation risk protection. This is all well and good in a bullish market, but as the market slows – which may well happen because of wider economic trends – one-to-one relationships should be mutually important. We certainly work best when we work directly with the banks to segment the debt, and it is inevitable that we’ll share historic collection information or let the banks know of any potential pitfalls on the horizon. This can only be achieved if there is a close relationship between Vendor and Purchaser. Our recent appointment of a Relationship Director is proof of how committed we are to strengthening this area of our business.
There is certainly a place for intermediaries, and we have excellent relationships, but I think it is important that we communicate effectively with them, to ensure that they are an effective conduit between vendors and buyers – and not a wall. The ideal is that they shouldn’t just work to get the best price for the bank – they should work to get the best deal. A long-term healthy relationship is more valuable than grabbing the highest price, then cutting and running with fingers crossed – or at least it should be.
Working in a transparent environment may not suit everybody, but we feel that it shows our professionalism, improves our effectiveness and – at the end of the day – wins us more business. And that’s the most important thing!