Normally, companies in the accounts receivable management industry are like a school of fish — they all move in the same direction at the same time. When things are good, they are good for everyone. When things are bad, everyone suffers. But lately, I have noticed a divergence in the force — the industry isn’t like a school of fish anymore; now it’s like a barbell. What I mean by that is that companies are either doing great or they are suffering, there doesn’t seem to be anyone in between those two extremes. Why am I mentioning this? Well, I am seeing more and more reports about how the economy is getting worse and consumers are struggling more than they have since before the pandemic and while that means there are likely more accounts to be collected, it also means that consumers aren’t going to have as much money to repay old debts.
Exhibit A: More consumers are falling behind on their credit card and loan payments and either need to curb their spending habits or risk plunging themselves deeper into debt, according to a report from a Wall Street analyst. Not only are more people falling behind on making their payments, the average balances on credit cards and auto loans are also increasing. Couple that with higher interest rates and that could spell economic disaster for a lot of consumers.
Exhibit B: Nearly two-thirds of consumers are living paycheck to paycheck, according to the results of a new survey. While that seems like a lot, that figure has remained relatively stable for the past year, indicating consumers have adjusted their spending yet still see their financial obligations outpace their incomes.
- One-third of consumers, though, have reached the limits on their credit cards.
Conclusion:
