The seesaw – a career in Collections & Recoveries

Written Aug 2020

Fram’s specialist & asset finance practice has seen a real upturn of late in demand for collections and recovery specialists. It’s no surprise really, given the world we entered almost overnight, when COVID arrived in Europe. However, it can be a strange environment for collections and recoveries professionals, because as the wider economy struggles their career prospects improve. It’s a seesaw, as the economy goes down, they can be busier than ever. It can often leave people feeling out of kilter with friends and family, and perhaps there’s some guilt attached to this. So, is the demand likely to continue and what are the skills required to excel in this field?

In many ways each recession is unique, but you can often come up with historical comparisons. It’s worth remembering, though, that this recession was brought on by a health crisis and not a major economic shock. The Spanish flu of 1918 was relatively short lived, was followed by the roaring 20’s and increased earnings. The flu of 1968, which was particularly virulent, was largely ignored and life carried on. However, the experts don’t think COVID will just disappear and clearly we haven’t just carried on as normal. Therefore, I decided to look in to last two major financial recessions and their effect on house repossessions for clues as to how this recession may affect activity within collections and recoveries.

Collections & recoveries - skillsFram works with a wide range of lenders, who finance a broad range of assets, equipment, and receivables, but the data on house repossessions is much more widely available than more esoteric assets and is also a good sign of an economy’s health. Repossessions spiked in the 90’s housing crash to over 70,000, which was the largest in 50 years, and whilst they spiked again in the financial crisis they peaked at 50,000 in 2009. They then remained high for a number of years too (the three years after 2009 were far worse than the three years before 2009) and then in 2019 they were as low as 4,580. I was surprised that the banking crisis of 2008/2009 had less of an impact on repossessions than the recession of 1991/92. However, it dawned on me that there was one key difference and that is government and central bank response globally. As the economy flatlined in 2009, governments globally took co-ordinated and unprecedented action and a key feature of this was reducing interest rates to historical lows.

Whilst employers and governments may not have given pay rises for a number of years, citizens who stayed in work and who had tracker mortgages/re-mortgaged were in effect given a pay rise by the banks, who reduced their cost of living overnight. This for me is a key feature of this recession. It may well be the worst recession for 300 years, but the economy was deliberately closed down and the range of government and central bank support, including lowering interest rates, was co-ordinated and decisive.

I’m a recruitment professional and not an economist, but whilst it is inevitable there will be many more customers struggling to make payments post COVID, and this trend will continue for the next few years, the numbers of really distressed customers may be much lower than the financial crisis and the 90’s recession. Where does this leave lenders and collections and recovery professionals? Well if my brief hypothesis is true maybe not in too bad a position.

We saw the lending market shut down quickly in March, but if anecdotal evidence it to be believed the lending taps have come back on as fast as they went off. CBILs, Bounce Back Loans, and the political mood generally being pro-lending, means that there are huge levels of liquidity. Yes, there’s more debt than ever and it’s clear from the provisions banks have made globally that there’s an expectation of an uptick in defaults over the next couple of years. Unemployment will rise over the autumn and any additional government support is likely to be less grandiose, and this will create a challenging environment in many sectors.

However, I am guessing that defaults shouldn’t be at a level to have a material effect on most businesses. However, the demand for experienced collections and recoveries professionals is likely to strong for the next few years. Therefore, what traits and skills will enable ambitious candidates to standout and build their career?

The ability to build relationships

Professionals in this field interact with a wide range of internal and external parties, including law firms and insolvency practitioners. It’s key to build effective relationships with third parties.

Strong time management

There are enormous demands on the time of collections and recoveries professionals in this sort of environment. The ability to meet deadlines and to manage your time effectively is key.

The ability to work calmly under pressure

In this sort of role, you are dealing with complex and often emotional matters. It’s important to keep your cool.

Ensuring you are familiar with the latest regulations

Having a willingness and keenness to always follow best practice and to be familiar with the latest regulations is very important.

Strong negotiation skills

You need to deliver the best outcomes possible and this will require excellent negotiation skills.

About Fam Search’s Specialist & Asset Finance practice

Established in 2010, Fram Search is a boutique specialist financial services recruitment company. We work with clients across the UK, providing high quality recruitment services, focusing on permanent & interim placements at all levels.

Fram’s specialist finance & lending practice works with firms in: bridging, development finance, asset finance, leasing, buy to let, mortgages, real estate, loans and invoice finance. We use our large and established networks to find off market candidates. We offer both retained and contingent search, but, uniquely, utilise headhunting techniques on all assignments. All staff have undertaken unconscious bias training.

Roles covered: Collections & Recoveries, Underwriting, Business Development, Finance, Operations, and Legal & Compliance

Please call us on 01525 864 372 to learn more.

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