LAS VEGAS — 2024 is going to be the year where the accounts receivable management industry will find out just how well-positioned consumers are to keep making payments on their debts and this will be a year where heightened placement volume will soften the blow of decreasing liquidation rates, according to a panel discussing the impact of the economy on the industry at RMAI’s Annual Conference yesterday.
There are plenty of warning signs that consumers are struggling to make ends meet, largely as a result of inflation that has raised prices during the past two years. The savings rate is only at 4%, which is half of what it was before the COVID-19 pandemic. As well, the amount of extra money that consumers are dedicating to their debt payments is dwindling, which is also a sign that consumers don’t have as much money to pay their debts.
Prospects that the Federal Reserve Board will begin cutting interest rates at some point this year could help ease inflationary pressures and help improve consumers’ financial situations, the panel noted.
“The high volume of accounts will soften the blow of softer liquidation rates,” said Matt Russell of TRAKAmerica during the discussion. “We will also likely see a spike in legal collections in 12-to-24 months.”
Another potential problem for companies is that consumers are re-prioritizing their debt obligations, focusing more on making sure their rent and mortgages are getting paid and other debts, like unsecured debts or debts that are not being credit reported, are becoming less important, said Dan Simmons from TransUnion.
