Survey: Cost of Labor Accounts for Nearly Half of Collection Agency Revenue

People, Postage and Phones: They’re often referred to as the “three P’s” that dominate the bottom line at companies throughout the credit and collection industry. But it’s the people costs in particular ? those for labor, employee benefits and payroll taxes ? that account for nearly half of an agency’s gross annual revenue, according to the recently-released 2005 ACA Benchmarking/Agency Operations Survey by ACA International, the Association of Credit and Collection Professionals (ACA).

Nationally, an average of 39 percent of agency gross revenue went to employee compensation in the form of salaries, wages, bonuses and commissions, making it the single largest expense line for the typical collection agency. Just under five percent went to payroll taxes and another percentage point covered costs associated with employee training, retirement plans and other company-sponsored benefit plans.

Health insurance premiums continue to rise much faster than the rate of overall inflation and represent a major concern for collection agencies, and small businesses in general. Company-sponsored health insurance expenses averaged three percent of agency revenue last year, surpassing even the costs for telephone service at the typical agency.

The annual benchmarking study conducted by ACA surveys the association’s U.S. collection agency members to help industry professionals gauge performance, compare costs and improve the efficiency of their businesses. The 2005 report features many improvements following a yearlong effort to redevelop the survey for greater accuracy and more meaningful measures. The new report also includes industry benchmarks for: liquidation percentage, commission rate, revenue per collector, cost per account, best times/days to call and number of accounts in collector queue.

The 2005 ACA Benchmarking/Agency Operations Survey is available to ACA members and non-members. To order visit www.acainternational.org or call Member Services at +1(952) 928-8000, ext. 711.