Debt has been rising tremendously since the COVID-19 pandemic, which has left the US population in a delicate financial situation. It is not all bad news as these same circumstances have catapulted the growth of the Debt Collection Industry above anyone’s expectations.
How can your account receivables & collection business leverage this unprecedented growth, going into 2023? Here are all the statistics you need to pay attention to.
Account Receivables & Debt Collection Market Status
Every reliable source of information points in the same direction: Account Receivables & Debt Collection are hot topics. The now-worth $30 billion (bn) Debt Collection Services market size expands by the minute, and is expected to hit $36bn by 2028, according to Global News Wire.
Along with it, the North American & European Debt Collection Software market size is expected to grow from $2.39 bn in 2022 to $4.15 bn by 2028.
This year, Ibis world shared that the US Debt Collection Agencies' market size ($17.9bn) surpassed by $1 bn the growth expectations MarketReaserch had for it in 2025.
Growth of this speed and magnitude can only be explained by the rise in consumer debt that the US population has been experiencing these past few years.
Debt in the US
The US has closed the third quarter of 2022 with a total of $16.5 trillion (tln) in consumer debt, with an average household debt of $96,371, according to the Federal Reserve Bank of New York.
The three main sources of debt are:
- Mortgages: closed Q3 with USD 11.67 tln in total debt, with a $282 billion increase since Q2.
- Student Loans: while it is the second larger source of debt, currently worth $1.57 tln, student loan debt has slightly contracted since the last quarter.
- Auto loans: this last quarter grew $22 billion, putting it at the third spot with a total of $1.50 tln in debt.
New Industry Standards: RPA and Omnichannel Debt Collection
In the past 10-20 years, Automation technology and AI have taken huge leaps in their development, and now offer such an operational advantage that cannot be neglected. This reality applies to almost any line of work, and is clearly the case with account receivables and debt collection.
The now worth $3.3 bn Accounts Receivable Automation market size is expected to reach $6.5 bn in 2027, according to Markets and Markets. On the other hand, the Robotic Process Automation (RPA) market was worth $1.40bn in 2019 and is expected to have an unprecedented growth of almost $10 bn by 2027, reaching a total size of $11 bn.
Owners are well aware of the impact that implementing RPA technology in their business has, and are taking action toward a full technological reconstruction of their operations.
Nanonets shares that over 78% of firms have already used RPA in their operations, with another 16% aiming to do so over the next three years, and according to Automation Anywhere, 98% of IT leaders say that automating business operations is critical to achieving business advantages.
Communication: the Great China Wall of Debt Collection
In account receivables and debt collection, the most significant growth barrier companies face is communication, as 78% of C-level executives report that their Accounts Receivable staff has dealt with payment disputes that may have been avoided with better communication, according to Wakefield and Versapay.
To solve this challenge, many debt collection companies have been implementing what’s called Omnichannel Communication Strategies, where they build a comprehensive, automated, and synchronized physical and digital platform that allows them to monitor and collect debt effectively across all channels: in person, through mail, phone calls, e-mails, text messages, and social media.
This holistic approach is based on the reality that now consumers have many ways of communicating, and expect companies to keep up. According to Marketing Week, consumers manage around six different communication touchpoints.
Omnichannel Debt Collection has proven to be beneficial in helping to break the barriers that old communication ways presented, and has already shown promising outcomes:
- Automating Omnichannel marketing is expected to result in a 90% client retention rate, according to a report by Omnisend.
- They also say that Omnichannel campaigns using SMS were 429% more capable to end in conversion.
- Adobe discovered that businesses with the best omnichannel customer interaction strategies see a 25% increase in close rates.
More on Omnichannel Debt Collection here.
Account Receivables and Debt Collection are aimed to experience unprecedented growth in 2023. The technological standards for the industry have risen, forcing companies to implement a head-to-toe restructuring of their operations, embracing automation, AI, and omnichannel communication systems to not only seize this growth opportunity but to stay relevant and competitive in such a fervent market.