August 18, 2013 in Business

Collection agency aims to establish good rapport with customers

By The Spokesman-Review
 
Dan Pelle photoBuy this photo

Tom Warrick, president of CBS Collections, holds Emma, who belongs to a legal secretary. Employees can bring their pets to work.
(Full-size photo)

Five facts

• About 30 million Americans have average debts of $1,500 subject to collection.

• Federal law allows up to a $1,000 fine if a collector calls a debtor’s cell phone without prior approval.

• Medical bills account for about 80 percent of all CBS Collections accounts.

• CBS Collections’ average for successful collection of medical debt in Spokane is about 23 percent.

• CBS Collections collectors go through an average of five months’ training.

Tom Warrick is the president of CBS Collections, a Spokane debt collection agency. The company’s roots go back to 1901, when his grandfather Nicholas MacLeod started a credit reporting business in partnership with a local collections attorney.

CBS Collections shares a building with ACRAnet, the other half of the family-owned operation at 521 W. Maxwell Ave. ACRAnet does mortgage history and work history verification.

After working in Seattle in the 1960s, Warrick moved back to Spokane in 1976 to run CBS Collections.

SR: How many people work at CBS Collections?

Warrick: The total company, both the ACRAnet and collecting sides, have about 57 workers. (CBS Collections) has roughly half of that number.

SR: How many accounts does CBS attempt to collect on?

Warrick: We have close to 21,000 accounts. Those are active accounts. We distinguish between clients — the companies asking us to get a debt collected for them — and customers, the ones who we contact for collection.

SR: When do you decide to stop trying to collect debts?

Warrick: When they’re paid off. It also depends on how large the balance is. And we look at the customer’s condition, and they are not able to pay. If they’re on welfare, or can’t find a job, we realize we can’t collect and we suspend the account.

SR: Do you ever keep trying on those?

Warrick: We will try to check every year. We look at credit reports and if it comes back they’re working, that can get us involved again.

SR: What are the primary types of debts that you’re trying to collect on?

Warrick: Medical bills are the No. 1 category. No. 2 is probably small business debt. No. 3, I’d have to say utilities.

SR: What about education loans and school debt?

Warrick: Those are usually assigned to the big 175: The large group of national companies who buy a lot of debt and work those accounts.

SR: Why do you like running this business?

Warrick:  I enjoy helping people. We take a different approach than other agencies. You can be hard core, or you can try to work out the debt repayments and establish a good rapport with the customer.

SR: Are you the biggest collection agency is this area?

Warrick: No. There are two others, Valley Empire and Automated Accounts.

SR: What advice do you have for debtors who want to do the right thing but aren’t sure what to do with a collection agency?

Warrick:  My response is not to shy away and do talk to the collectors and be honest with them.  Most agencies will accept (time) payments if payments can’t be made in full.

SR: How many collectors do you have on staff?

Warrick: We have 10. They are all women.

SR: Is that by design or accident?

Warrick: It may be an accident but across the (collection) industry, women are the best collectors. They may have motherly qualities. Many of them are also good at dealing with women, who in many circumstances are the ones paying the family’s bills.

SR: How hard is collecting?

Warrick: It depends on how you treat the debt. You have to be very professional, tell them who you are and explain the balance (they owe) and you ask for payment in full. If they can’t pay, you try to set up a payment plan they can handle.

SR: What are collectors paid?

Warrick: They’re paid salary and commission. The base salary is $10 per hour and goes up with experience.

SR: What’s the rate of commission?

Warrick: It ranges from 10 to 20 percent of the net (what we get after collecting a debt.) The usual fee we get, on average, is about 34 percent of the debt. So if we collect $100, after giving the client their 66 percent, the collector generally gets between 10 percent to 20 percent (of the $34) as commission.

SR: What kind of hiring are you doing?

Warrick: We need to hire two more collectors, because we have no turnover in that group. That means we have enough people taking vacations that we need to add more collectors. We’re looking specifically for Spanish-speaking collectors right now.

SR: How’s the company doing?

Warrick:  We’re up from last year. And last year we were up from 2011. I can’t give you the exact amount of revenue, but we’re up 5 to 7 percent.

SR: Wouldn’t business have been better from 2008-2011 because the economy was so bad?

Warrick: You’d think so, but it’s the opposite. The weaker the economy, the longer our clients hang onto their unpaid accounts (before turning to a collection agency). They hung onto the account hoping for the best.

It used to be if a bill was unpaid after 120 days, we’d get the account. Now it’s 220 days before it’s turned over.

SR: Are federal laws changing some of the regulations that apply to collection?

Warrick: The main changes are new rules added to the Fair Debt Credit Collection Practice Act. It makes the business a little more paper-driven, but it’s not making what we do more complicated. We’re already following all the laws. The intent (of the new changes) is to control the large 175 agencies and standardize what they do. It will create a level playing field.

SR: What kind of changes would you like to see in that law?

Warrick: One would be to update some contact rules, such as the one now that keeps us from calling a customer on a cell phone without their verbal or written permission. That’s a rule that goes back to the 1980s when it was set up to target telemarketers. But we got thrown in with them when it was passed.

SR: Do you have some inherent legal restrictions on how long you can pursue a collection?

Warrick: Under the State of Washington statute of limitations, we can collect for up to six years after the debt. We explain that to people when we call. It used to be we didn’t have to explain that. We can keep asking for payment. But that’s as far as you can go, after six years.

SR: Will there be an impact on your business as the new Affordable Care Act law affects medical billing and health care?

Warrick: We’re paying attention to that, because it could have a big impact on us. We heard that in Canada, in 1984, after that country adopted a full national health plan, about 50 percent of collection agencies there went out of business afterward.


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