Activities H1 2009 - AMCCamcc.ro/wp-content/uploads/2018/01/20170109-AMCC... · Despre AMCC...

Since its establishment

, AMCC is a full member of FENCA –

Federation of European National

Collection Associations.

Through AMCC,

Romania became the

15th Member of FENCA.

Despre AMCC

AMCC’s mission is to represent its members at national and international level, to promote the concept of credit services management and support it in the national legislation.

AMCC wants to be a national representative association for debt collection agencies in Romania and to implement a high standard of quality in the management of receivables.

The main purpose of AMCC isto regulate the profession and toset professional ethicalprinciples to be followed bydebt collection companiesin relation to retail andcorporate debtors.

AMCC’s scope:

3

Membrii AMCC

AMCC was founded in 2007 at the initiative of Coface, EOS KSI and Creditreform.

Currently brings together 17 members.

4

Agenda

What is debt collection?

Debt collection market evolution and trends in S1 2017

Romanian B2C debt collection market:

B2C – Serviced debt

B2C – Purchased debt

Romanian B2B debt collection market

International collection

Continuous improvement measures

5

A debt collection agency acts as an intermediary between a debtor and a creditor. It can facilitate a payment schedule for the debtors.

The communication between the collection agents and the debtors is the quickest and easiest way to solve the debt situation under conditions that are favorable to all parties.

Creditor

Debtor Debt collection agency

Debt collection process

Who are the companies (creditors) that refer collection of debt?

Who is the debtor?

Banking institution

Telecom companies

Leasing

Insurance

FMCG

Universities

Pharma etc.

Natural persons (employees, students, etc.)

Legal persons (limited liability company, corporations, etc.)

Rights over the debt are referred to a debt collection agency or a consortium of companies.

Collection is taken over by the company which owns the rights over the debt.

Rights over the debt are kept by the creditor

Debt collection operations are performed by the contracted company, in return receiving a fee, according to the service agreement.

Discussions with the debtor include:1. Identify solutions for payment of debt;2. Decide on the best option for both the debtor

and the creditor; 3. Agree and sign a written agreement based on

previous discussions.

Why do companies choose to externalize debt collection?

A possible answer would be due to legislation (e.g.: prudential rules regarding non-performing loans), cash flows constraints and decisions to increase operational efficiency can lead to debt collection externalization.

How is debt transferred to debt collection companies?

a. Purchase rights for the debt (Debt purchased)

b. Collection based on success fee (Debt Serviced)

What does this mean for the debtor?

How is the debtor contacted?

Phone calls E-mail Written

correspondence Field activities

What is the general approach?

Cr

ed

ito

rD

eb

tor

7

Field collection and legal in-house services are among the least used services by the members in S1 2017

Debt collection services

Services provided for the B2C sector: All of the respondents use call-center services, written correspondence & e-mails to communicate with B2C clients. Field collection activities have been offered more frequently this semester when compared to S1 2016, together with legal in-house debt collection.

Services provided for the B2B sector: Similar to B2C services, respondents also use e-mail and written correspondence services with call-center services being used by ~90% of the respondents. As in S1 2016, field collection is among the least used services for B2B collection.

69%

77%

92%

92%

92%

100%

100%

100%

64%

73%

100%

100%

73%

100%

100%

100%

0% 20% 40% 60% 80% 100% 120%

Field collection

Legal in-house

SMS

Skip tracing

Coordination of enforcement procedures

Call-center

Written correspondence

E-mail

Type of services offered - B2CS1 2016 vs S1 2017

S1 2017 S1 2016

54%

69%

77%

92%

92%

92%

100%

100%

54%

62%

62%

85%

85%

85%

85%

85%

0% 20% 40% 60% 80% 100% 120%

Field collection

Legal in-house

Coordination of enforcementprocedures

Call-center

SMS

Skip tracing

Written correspondence

E-mail

Type of services offered - B2BS1 2016 vs S1 2017

S1 2017 S1 2016

8

7%-7%

8%

-40%

-20%

0%

20%

40%

60%

80%

-

500

1,000

1,500

2,000

2,500

3,000

S1 2014 S1 2015 S1 2016 S1 2017

Total number of full-time employees by service performed

2014- 2017 evolution (for 1st semester only)

B2B Debt collection

Legal Debt collection

Field collection

Others (IT, Accounting, Financial, Sales, Marketing etc.)

B2C Debt collection

Dynamics

54%

4%

22%

8%

12%

Full-time employee structure by service performed

S1 2017 B2C Debt collection

B2B Debt collection

Others (IT, Accounting, Financial, Sales, Marketing, etc.)

Field collection

Legal Debt collection

19%

10% 11% 10% 10%

18%

0%

10%

20%

30%

B2CCollection

B2BCollection

Others FieldCollection

LegalCollection

Employee turnover rate by service performed

S1 2017

Turnover Rate per ServiceTotal rate S1 2017Total rate S1 2016

The Romanian debt collection industry employs over 2,500 people, more than half of them in the B2C collection segment

Employee structure

1312

On a general note, the debt collection sector has registered an increase in the number of employees from S1 2014, redressing from the slight decrease from S1 2016; B2C debt collection is the most employee-intensive function, accounting for approx. 54% of the total FTE.

The turnover rate has slightly increased in S1 2017 compared to S1 2016, driven mostly by departs from the B2C collection segment.

2,5032,337 2,324

2,51811 13

Number of participants

16%

9

The total number of active clients in S1 2017 is comparable to S1 2016, with slightly higher figures on the B2C segment

Active clients

*Number of active clients was calculated at AMCC level**One client does no necessary account for one client, as a creditor can request collection services from more than one collection agency.

6083 78 82

5038 40

4926

5442

6324

3128

31

19

16

14

8

11

9

8

18

1

5

6

3

0

50

100

150

200

250

300

S1 2014 S1 2015 S1 2016 S1 2017

B2C Evolution of the number of active clients S1 2014- S1 2017

Leasing

Utilities

Insurance

IFN

Others

Telecom

Banking

2.8% 3.6% 0.6%0.4%

0.4%

2.2%

90.0%

B2B - Active clients by activity sectorS1 2017

Banking

Telecom

Leasing

IFN

Insurance

Utilities

Other

B2C segment: The number of active clients has slightly increased compared to the similar period from 2016, mostly due to the international clients. Most of the clients are from Banking, Insurance and Telecom industries.

B2B segment: Most of the active clients come from other industries such as FMCG, Pharma, IT, Distribution, with a rather limited representation from the Banking and Telecom sector.

The higher share of banking B2C clients can be explained by the tendency of reducing risk related to NPLs.

10

Agenda







Debt collection market for international clients


11

Executive Summary (1/2)

Romanian B2C debt collection market – Serviced debt.

Serviced Debt referred in S1 2017 decreased by 29% compared to S1 2016, in terms of debt value, while in terms ofnumber of cases it remained constant.

The total value recovered in S1 2017 by debt collecting companies registered a decrease by 57% compared to S1 2016,mainly due to a lower average value per case referred by creditors.

The average value per case for debt referred in S1 2017 was 215 EUR/case, while for debt recovered was 67 EUR/case.

The most important sector in terms of number of cases referred for S1 2017 remained, as in S1 2016, telecom sector.

Romanian B2C debt collection market – Purchased debt.

The value of purchased debt referred decreased in S1 2017 by 36% compared to S1 2016, mainly due to lower valuesacquired in the banking and telecom sector.

In S1 2017, the guaranteed debt reached 60% of the total B2C banking debt purchased.

The average value per case for purchased debt referred in S1 2017 was 657 EUR/case, while for debt purchasedrecovered was 154 EUR/case

Debt collection market in S1 2017

Romanian B2B debt collection market – Serviced debt

In terms of serviced debt referred, the number of cases in S1 2017 registered an increase of 14%, mainly due to a highernumber of cases in the telecom sector.

The average value per case for serviced debt referred was in 6,463 EUR/case S1 2017, while the recovered averagevalue per case was 564 EUR/case.

Romanian B2B debt collection market – Purchased debt

In S1 2017, the B2B purchased debt referred, in terms of value, has registered a record level (320 mil EUR), mainlydue to the purchase of a large banking debt portfolio that accounted for ~94% of the total B2B purchase debt referred.

Debt collection players expect a rather moderated growth in terms of debtcollection for the second part of 2017 due to debt purchased reaching maturityand local economic growth that can influence the payment habits of debtors.

12

Executive Summary (2/2)

Operational performance and market regulations

Services offered. Main services provided by the respondents are written correspondence, e-mail, phone calls, skiptracing and call-center services. Field collection has registered a slight increase in S1 2017.

Employee structure. B2C collection segment is the most employee-intensive sector accounting for more than 50% full-time employee.

Operational improvement. The respondents’ main focus for the first semester of 2017 was on employee developmentto increase efficiency and enhance client relationship and client-orientated initiatives.

Market regulations. The members are expecting that new regulations will be imposed and focus on diversifying theproduct portfolio to be able to answer demanding and new needs from the clients’ side.

Debt collection players have in plan during the next period to improve operational efficiency throughspecific initiatives (e.g. optimize core business processes, clearly define procedures, trainings foremployees, etc.) and enhance client satisfaction by providing high quality customized services.

13

B2C Collection

3,654,766

B2B Collection

3,784,978

Debt purchased

27,376,434

Total 34,171,927

Survey statistics

Total number of respondents: 13, covering a representative estimate of 70% of the total debt collection market (debt servicing and debt purchasing) and 90% in terms of debt servicing market.

The Survey was commissioned by AMCC to Ensight Management Consulting and was prepared in accordance to data submitted by each participating AMCC member.

Debt referred S1 2017 (EUR) Debt recovered S1 2017 (EUR) Revenues S1 2017 (EUR)

Romanian Market

B2C 905,082,503

B2B 668,209,393

Total 1,573,291,896

Romanian Market

B2C 169,987,799

B2B 23,263,726

Total 193,251,525

NB: Market dynamics calculated based on data from S1 2016¹ Only purchased debt

-33%

43%

99.5%

54%

53%

-12%

-22%

-18%

-48.1%

Companies that include in their portfolio of services Debt Collection:

Creditreform Romania Coface Romania Re Collection

Companies that include, besides Debt Collection, Debt Purchasing:

Debt Collection Agency¹ Creditexpress Romania EOS KSI Romania KRUK Romania Top Factoring Improvement Credit Collection

Cycle European Fire Credit Kredyt Inkaso¹ Getback Recovery¹

103.9%

14

The expectations for the second half of 2017 are rather reserved due to regulatory instability

Debt collection sector expectations for 2017

Major growth drivers B2C.

AMCC members that participated in the survey stated social (population indebtedness), economical (salaries evolution) and specific regulatory aspects to have impact on the debt collection market evolution. Cultural openness to debt collection procedures has registered a slightly growth in importance among the members.

Major growth drivers B2B.

Similar to B2C, social and economical factors are expected to have a great impact on market evolution. GDP evolution has become as important as the specific regulations factor, together with the evolution on the Euro market that can have a direct impact on B2B local market.

Expectations: The AMCC members expect that the

proposed regulatory changes in Romania will significantly influence the market.

Thus, factors as population level of indebtedness for B2C or financial leverage degree in B2B will have a higher impact in the debtors payment behavior.

0

2

4

6

8

10

12

Major drivers of the B2B Debt Collection market

Major drivers of the B2C Debt Collection market

Impact on EUR and other currency exchange rate

NPL strategy elaborated by NBR

Specific regulations to keep in mind

GDP evolution

Bankruptcy/insolvency cases

Financial leverage degree in B2B

Cultural openness to debt collection procedures

Patterns related to the consumption basket

Debt collection specific software/technology

Regulatory

Economy

Social

TechnologyImpact on EUR and other currency exchange rate

Population level of indebtedness Unemployment

Average net salary evolution

Specific regulations to keep in mind

NPL strategy elaborated by NBR

Debt collection specific software/technology

Patterns related to the consumption basket

Cultural openness to debt collection procedures

Regulatory

Economy

Social

Technology

15

The respondents foresee an increase both in the number of indebted population and customers with repayment difficulties in S2 2017

Market trends for the first semester of 2017

23.1%

53.8%

23.1%

Members perspective –Indebted population

Evolution in the next 6 months

Decrease Increase Constant

15.4%

46.1%

38.5%

Members perspective –Number of customers with repayment

difficultiesEvolution in the next 6 months

Decrease Increase Constant

Indebted population: Expectations regarding indebted population are rather on a high note, since consumption is expected to increase as well.

Customers with repayment difficulties: The increase of the ROBOR rate might have an impact on the payment capacity of the population, as seen also in the respondents’ general perspective. Some of the respondents expect that the number of customers with repayment difficulties remain constant, considering also additional services/products to counterpart potential issues.

16

Sector evolution for the second part of 2017 will be rather constant, respondents estimating a slight increase in values collected

Sector evolution in S1 2017

Sector evolution. B2B market has registered a steady growth when compared to S1 2016, counterbalancing the decrease in the B2C sector. Increase is mostly determined by purchased debt.

Trendlines for development among AMCC members: Maintain market share by debt purchase and

expand service offering to overcome potential payment problems on the debtors’ side;

Increase the importance of juridical collection;

Market evolution until the end of the year. Respondents expect an increase in revenues, sustained by previously referred portfolio which will reach maturity in the second part of the year. Market growth could also be influenced by the evolution of the debts recovered on both B2C and B2B market.

The respondents also look to foresee repayment issues with a more diversified service portfolio.

1,345,267,617

905,082,503

436,188,722

668,209,393

-

500,000,000

1,000,000,000

1,500,000,000

2,000,000,000

S1 2016 S1 2017

Value (EUR) of Domestic Debts Referred B2C vs B2B

S1 2016 vs S1 2017

B2C B2B

33%

53%

218,434,849 169,987,799

16,289,266

23,263,726

-

100,000,000

200,000,000

300,000,000

S1 2016 S1 2017

Value (EUR) of Domestic Debts Recovered B2C vs B2B

S1 2016 vs S1 2017

B2C B2B

43%

-22%

Referred

Recovered

17

Increase of revenues for the first semester in 2017 was mostly due to the increase of debt purchased generated revenues

Revenues

Revenue split: Around 79% of the revenues from S1 2017 originated from debt purchase.

Compared to the similar period from 2016, revenues coming for purchased debt kept a positive trend and almost doubled.

-

3,000,000

6,000,000

9,000,000

12,000,000

15,000,000

18,000,000

21,000,000

24,000,000

27,000,000

30,000,000

33,000,000

36,000,000

39,000,000

S1 2014 S1 2015 S1 2016 S1 2017

Revenues (EUR) Evolution S1 2014 – S1 2017

B2C Debt collection B2B Debt collection Debt purchased

61%

8%

31%

79%

11%

10%

S1 2016/ S1 2017Revenues (EUR)

Dynamics

S1 2016 S1 2017

B2C Collection 7,035,845 3,654,766 -48.1%

B2B Collection 1,856,598 3,784,978 103.9%

Debt purchased 13,722,108 27,376,434 99.5%

Total 22,614,551 34,171,927 54.0%

Volume. The reported revenues for the first semester of 2017 reached ~34 MEUR, an increase of ~54% when compared to the similar period from 2016.

55%

17%

28%

63%

6%

31%

19

Agenda









20

Romanian B2C market has registered a decrease (29%) in value of serviced debt, mainly due to lower value of cases referred by clients

Serviced debtNumber of cases Value in EUR

Avg. Value in EUR/Case

S1 2016 S1 2017 S1 2016 S1 2017 S1 2016 S1 2017

Debt Referred 2,132,611 2,128,148 640,820,938 456,924,312 300 215

Debt Recovered 927,325 940,839 145,964,745 62,822,743 157 67

B2C by category split. In terms of number of cases, serviced debtreferred represents in the first semester of 2017 roughly 76% of theRomanian B2C debt collection market. While serviced debt recoveredaccounts for 58% in S1 2017 of the total cases of Romanian B2C debtrecovered.

B2C market dynamics. The B2C serviced debt referred in 2017decreased by 29% in terms of value managed, mainly due to clientportfolio optimization measures performed by collections agencies andlower value per case of portfolios referred by clients.

B2C market volume. The total value of serviced debt recoveredreached ~63 mil EUR in S1 2017, while the average value per case was 67EUR/case.

Romanian B2C debt collection market – Serviced debt

144

188

300

215

92

51

98 157

67

212

-

100

200

300

S1 2014 S1 2015 S1 2016 S1 2017

Debt serviced referred and recovered - Average value

(EUR)/case

Debts referred Recovered Average

Debts recovered Referred Average

92

212

21

Serviced debt

Debt Referred Debt Recovered

S1 2016 S1 2017 S1 2016 S1 2017Sectors

Banks 392,496 295,686 273,671 313,131

Telecom 1,487,936 1,519,208 554,721 520,445

Leasing 12 94 8 65

IFN 158,593 129,454 57,529 49,900

Insurance 762 265 2,228 911

Utilities 54,351 94,614 27,456 49,521

Other* 38,461 88,827 11,712 6,866

Total 2,132,611 2,128,148 927,325 940,839

Romanian B2C debt collection market – Serviced debt


S1 2016 (‘000)

S1 2017 (‘000)

S1 2016 (‘000)

S1 2017 (‘000)

406,634 251,268 73,838 35,395

152,871 138,966 49,989 16,992

5 107 3 49

57,476 32,136 13,877 3,748

1,315 173 212 133

13,032 10,634 5,549 6,003

9,485 23,639 2,493 500

640,820 456,924 145,964 62,822

Number of cases Values (EUR)

Guaranteed/Non Guaranteed debt. Guaranteed serviced debt referred in S1 2017 has reached 43% out of the totalRomanian banking debt referred in terms of value, while guaranteed recovered debt accounts for 20% of the total recoveredRomanian banking debt.

Sector split. The most active sector in terms of number of cases is the telecom sector with 54% of the total number of B2Creferred serviced debt. In terms of recovered serviced debt, the sectors with the most collected cases in S1 2017 are Telecomand Banking with ~55% and respectively ~33%.


Telecom and banking serviced debt represent together 65% of the total B2C service debt referred cases in S1 2017

Debt Referred

Debt Recovered

S1 2016

S1 2017

S1 2016

S1 2017

1,036 850 270 113

103 91 90 33

485 1,141 463 758

362 248 241 75

1,726 654 95 147

240 112 202 121

247 266 213 73

300 215 157 67

*other sector: FMCG, education, distribution, etc.

22

Agenda









23

The recovering of purchased debt registered a record value of ~107 mil EUR in the first semester of 2017

Purchased debtNumber of cases Value in EUR


S1 2016 S1 2017 S1 2016 S1 2017 S1 2016 S1 2017

Debt Referred 518,112 682,557 704,446,679 448,158,191 1,360 657

Debt Recovered 575,565 694,508 72,470,104 107,165,056 126 154

B2C by category split. In the first semester of 2017, purchased debtreferred accounted for ~24% of the total Romanian B2C referred debt(serviced and purchased) in terms of number of cases. While debtrecovered accounted for ~42% of the total number of cases of B2C debtrecovered.

B2C market dynamics. In S1 2017, the purchased debt referred interms of number of cases increased by 32%, compared to S1 2016. Whilethe average value decreased by 52%, mainly due to lower value ofportfolios in the banking, telecom and IFN sectors.

B2C market volume. The total value of purchased debt recoveredreached ~107 mil EUR in S1 2017, while the average value per case was154 EUR/case.

Romanian B2C debt collection market – Purchased Debt

1,102

2,208

1,360

657

1,096

102

129 126 154 130

50

150

250

350

450

550

-

500

1,000

1,500

2,000

S1 2014 S1 2015 S1 2016 S1 2017

Debt purchased referred and recovered - Average value

(EUR)/case

Debts referred Referred Average

Debts recovered Recovered Average

1,096

130

24

Purchased debt


S1 2016 S1 2017 S1 2016 S1 2017Sectors

Banks 185,211 67,062 479,800 536,652

Telecom 323,031 323,773 60,315 81,529

Leasing 11 2

IFN 9,870 280,332 13,799 44,980

Insurance 21,299 20,624

Utilities 10,030 10,030

Other* 1,349 350 693

Total 518,112 682,557 575,565 694,508

Romanian B2C debt collection market – Purchased Debt


S1 2016 (‘000)

S1 2017 (‘000)

S1 2016 (‘000)

S1 2017 (‘000)

543,896 263,835 65,026 91,846

157,402 85,386 3,641 4,724

40 0.016

3,147 95,939 2,053 8,027

1,932 2,464

2,706 45

250 0.307 57

704,446 448,158 72,470 107,165


Guaranteed/Non Guaranteed debt. Guaranteed consumer debt in S1 2017 has reached60% out of the total banking purchased debt referred in terms of value. While recoveredguaranteed purchased debt was ~9% of the total recovered banking debt acquired.

Sector split. In terms of purchased cases referred, the most active sectors are Telecom with47% and IFN with 41%, while in terms of value referred, Banking (59%) remains the mostimportant sector, together with Telecom (19% share) and IFN (21% share).


In terms of purchased debt referred, 80% of the value was acquired from the banking and IFN sectors

Debt Referred

Debt Recovered

S1 2016

S1 2017

S1 2016

S1 2017

2,937 3,934 136 171

487 264 60 58

3,651 8

319 342 149 178

91 119

270 5

186 1 83

1,360 657 126 154

*other sector: FMCG, education, distribution, etc.

25

Agenda









26

The total value of B2B debt referred in S1 2017 has reached 668 mil EUR, due to the purchase of an important banking debt portfolio

Serviced debtNumber of cases Value in EUR


S1 2016 S1 2017 S1 2016 S1 2017 S1 2016 S1 2017

Debt Referred 47,151 53,874 394,064,039 348,187,881 8,357 6,463

Debt Recovered 34,060 38,811 16,067,374 21,875,919 472 564

B2B by category split. In S1 2017, in terms of value, serviced debt referred accounted for 52% of the total Romanian B2B market.As the value of purchased debt referred increased significantly, it reached a 48% share in total referred value of the B2B market,compared to S1 2016 when it accounted for only 10%.

B2B market dynamics. In S1 2017, the total number of cases referred (serviced & purchased) have slightly decreased by 2%,mainly due to purchased debt. Whereas, the total number of cases recovered (serviced & purchased) have increased by 22% andreached a total of 42k cases.


Purchased debtNumber of cases Value in EUR


S1 2016 S1 2017 S1 2016 S1 2017 S1 2016 S1 2017

Debt Referred 17,647 9,754 42,124,683 320,021,512 2,387 32,809

Debt Recovered 780 3,718 221,892 1,387,807 284 373

27

Romanian B2B debt collection market – Serviced Debt


Guaranteed/Non Guaranteed debt. Guaranteed B2B serviced debt referred in S1 2017 has reached 29% out of the totalB2B serviced debt referred in terms of value. While the value of guaranteed serviced debt recovered accounts for 83% of thetotal recovered value of B2B banking serviced debt in S1 2017.

Sector split. The most active sector in terms of number of B2B debt serviced cases is the telecom sector with 38% of the totalnumber of B2B serviced debt referred in S1 2017. In terms of value, B2B banking purchased debt in S1 2017 registered thehighest share (93%) among Romanian B2B debt referred with a value of approx. 325 mil EUR


The most important sectors in terms of value for B2B debt serviced referred are Banks, Telecom and Other sectors*

Serviced debt


S1 2016 S1 2017 S1 2016 S1 2017Sectors

Banks 7,645 6,824 14,463 12,415

Telecom 12,722 20,626 5,822 12,434

Leasing 46 846 28 499

IFN

Insurance 18 14

Utilities 140 17

Other* 26,598 25,560 13,730 13,449

Total 47,151 53,874 34,060 38,811


S1 2016 (‘000)

S1 2017 (‘000)

S1 2016 (‘000)

S1 2017 (‘000)

354,025 325,148 7,398 12,270

16,938 5,225 1,369 1,514

67 965 33 446

113 43

783 17

22,248 16,734 7,248 7,601

394,064 348,187 16,067 21,875

Debt Referred

Debt Recovered

S1 2016

S1 2017

S1 2016

S1 2017

46,308 47,648 512 988

1,331 253 235 122

1,463 1,141 1,189 894

6,310 3,108

5,598 1,014

836 655 528 565

8,357 6,463 472 564

*other sector: FMCG, services, etc.

28

Purchased debt


S1 2016 S1 2017 S1 2016 S1 2017Sectors

Banks 1,847 4,204 20 450

Telecom 15,800 5,461 748 3,267

Leasing 81 12

IFN 8 1

Insurance

Utilities

Other

Total 17,647 9,754 780 3,718

Romanian B2B debt collection market – Purchased Debt


S1 2016 (‘000)

S1 2017 (‘000)

S1 2016 (‘000)

S1 2017 (‘000)

23,927 302,166 57 1,057

18,197 8,658 142 328

1,503 21

7,693 1

42,124 320,021 221 1,387


Guaranteed/Non Guaranteed debt. Purchased debt referred in S1 2017 has increased significantly, compared to the similarperiod of 2016, mainly due to a large banking debt portfolio acquired in the first semester of 2017 of both guaranteed (63%) andnon-guaranteed (37%) debt.

Sector split. As the banking sector has accounted for a large share, in terms of value, (~94%) of the B2B debt purchased in S12017, telecom sector has decreased significantly in terms of both number of cases purchased and value of portfolio acquired. Whilethe average value per telecom purchased case referred has increased with ~37% to 1,585 EUR/ Case compared to S1 2016.


The most important sectors in terms of value for B2B debt purchased referred are Banks, Telecom and IFN

Debt ReferredDebt

Recovered

S1 2016

S12017

S1 2016

S12017

12,957 71,876 2,857 2,350

1,152 1,585 191 101

18,559 1,814

961,728 1,500

2,387 32,809 284 373

29

Agenda









30

International debt recovered by local players have increased in terms of number of cases and value constantly over the past 4 years

International debt referred

Number of cases Value in EUR Avg. Value in

EUR/Case

S1 2016 S1 2017 S1 2016 S1 2017 S1 2016 S1 2017

B2C 555,009 563,097 933,744,612 1,174,929,421 1,682 2,087

B2B 32,304 20,505 37,530,614 31,755,650 1,162 1,549

B2C by category split. In S1 2017, international B2Cdebt referred accounted for 96% of the total internationalmarket in terms of cases.

Market dynamics. As the number of international debtreferred B2C & B2B cases has remained relativelyconstant, the average value per case referred has increasedin S1 2017 compared to the similar period of 2016 with~400 EUR.

Collection market for international clients – Debts referred & recovered

274,732

359,749 587,313 583,602

+31%

+63%-1%

-50%

0%

50%

100%

-

200,000

400,000

600,000

S1 2014 S1 2015 S1 2016 S1 2017

International debt – B2C & B2B total number of cases referred and evolution

No. of cases Dynamics

International debt recovered

Number of cases Value in EUR Avg. Value in

EUR/Case

S1 2016 S1 2017 S1 2016 S1 2017 S1 2016 S1 2017

B2C 191,100 297,581 517,699,446 630,422,848 2,709 2,118

B2B 16,103 11,456 16,030,009 17,052,337 995 1,489

31

International debt


B2C B2B B2C B2BSectors

Banks 334,468 1,334 186,772 693

Telecom 162,410 6,972 63,692 865

Leasing 188 564 122 366

IFN 3,762 197 968 36

Insurance

Utilities 61,656 10,986 45,959 9,265

Other 613 452 68 231

Total 563,097 20,505 297,581 11,456

Collection market for international clients – Debts referred & recovered


B2C (‘000)

B2B(‘000)

B2C(‘000)

B2B(‘000)

1,115,887 545 612,237 328

37,985 5,546 7,214 183

2,470 6,821 1,705 5,115

2,695 773 168 14

15,527 10,386 9,079 8,806

363 7,682 17,412 2,603

1,174,929 31,755 630,422 17,052


Guaranteed/Non Guaranteed debt. Guaranteed consumer debt in S1 2017 is only present for B2C category and accounts foronly 3% in terms of number of cases, out of the total international banking debt referred.

Sector split. As 96% of the debt referred represents B2C cases, banks (59%), telecom (29%) and utilities (11%) account for 99%of the total B2C number of cases referred in S1 2017.


The most important sectors in terms of number of international debt referred are Banks, Telecom and Utilities

Debt ReferredDebt

Recovered

B2C B2B B2C B2B

3,336 409 3,278 474

234 795 113 212

13,139 12,094 13,978 13,978

716 3,927 174 404

252 945 198 950

594 16,996 256 11,271

2,087 1,549 2,118 1,489

32

Agenda







Collection market for international clients


33

In S1 2017, respondents have marked maturity of collection processes as one of the most important success factors

Key Success Factors and Process maturity

0%

8%

15%

8%

15%

0%

23%

15%

15%

31%

54%

69%

62%

0%

0%

8%

8%

8%

8%

15%

15%

23%

46%

46%

54%

69%

0% 20% 40% 60% 80% 100%

Sophistication of sales skills

Regulatory incentives for debt collection

Economic environment

Sales networks/Regional coverage

B2B networking

Documentation of procedures

Employee bonus schemes

Support activities efficiency

Early start of the collection process

Administrative employee experience and performance

Product portfolio mix

Automation of activities (IT integration)

Maturity of collection processes

Key Success Factors

S1 2017 S1 2016

Key Success Factors. The most important KSFs in the first part of 2017 according to AMCC members has become maturity of collection processes, followed by IT integration and product portfolio mix.

The most selected key success factor was maturity of the collection processes, selected by 9 respondents. The general idea is that the newer the portfolio the bigger the chances to collect the debt

IT integration together with product portfolio and employee performance are seen as critical factors in order to perform on the local debt collection market.

34

Business improvement is mostly focused on employee performance client-focus initiatives

S1 2017 business improvement initiatives

0%

23%

23%

31%

23%

54%

54%

31%

62%

0%

23%

23%

23%

31%

31%

46%

46%

77%

0% 20% 40% 60% 80% 100%

No business improvement initiatives in in S1 2015

Improving the product quality

Improving the internal / risk management control level (other than legally imposed)

Cost cutting

Increase in competitiveness / reducing the pressure coming from the competition

Client-focus initiatives (e.g. quality of services)

Preparing the company for future development / strategy (organization, …

Improved monitoring of company activity (measuring performance at a process level …

Employee performance (e.g. training)

S1 2017 vs S1 2016 Objectives of business improvement

initiatives for B2C Collection

S1 2017 S1 2016

0%

0%

27%

36%

64%

64%

18%

27%

64%

0%

23%

23%

23%

23%

31%

38%

46%

69%

0% 20% 40% 60% 80% 100%

No business improvement initiatives in in S12015

Increase in competitiveness / reducing thepressure coming from the competition

Improving the internal / risk managementcontrol level (other than legally imposed)

Cost cutting

Preparing the company for futuredevelopment / strategy (organization,…

Improved monitoring of company activity(measuring performance at a process level…

Improving the product quality

Client-focus initiatives (e.g. quality ofservices)

Employee performance (e.g. training)

S1 2017 vs S1 2016 Objectives of business improvement

initiatives for B2B Collection

S1 2017 S1 2016

B2C business improvement. In S1 2017 the focus remained on employee performance (77%), with companies investing in trainings (internal & outsourced) for employee development, negotiation skills and on-the-job learning. Monitoring performance is another important business improvement that seeks to increase processes’ and reporting efficiency.

B2B business improvement. The main business initiative mentioned by the respondents is client-focus initiatives to increase the quality of services. Employee performance is seen as an important improvement also for the B2B sector as well.

35

The most utilized segmentation criteria are end-use market and segmentation by client (used by over 80% of members)

Market segmentation criteria

Client segment

Product

End-use market

Segmentation criteria. Most utilized criteria is the end-use market (over 90% of players are using this criteria in managing their client portfolio), tied with client segmentation (over 80%)

Product based segmentation and risk level have emerged as an important criteria for market segmentation purpose, selected for over 70% of the respondents.

All players are using at least one segmentation criteria. Generally, the regional factor was not selected by many

members, as currently it is not perceived as a significant benefit booster.

15%

69%

69%

77%

77%

25%

67%

75%

83%

92%

0% 20% 40% 60% 80% 100%

Region

Risk level

Product

Client segment

End-use market

Segmented approach to market by criteria

S1 2017 S1 2016

Number of criteria used

One criteria 8%

Two criteria 23%

Three criteria 8%

More than three criteria 54%

36

Most frequent KPIs are set together with the client and main focus remains on the level of collected cash

KPI methodology & IT areas covered

8%

23%

38%

31%

23%

54%

77%

62%

77%

8%23%

31%

31%

31%

31%

62%

77%

85%

0% 20% 40% 60% 80% 100%

Other recovery rates

Administrative efficiency

Delinquency rate

Write-offs

Cash collected/active employee hour

Collected cash, total/client

Collected cash, % of debt referred/client

Collected cash, total

Collected cash, % of debt referred

Major KPIs utilized in the B2C Collection process

S1 2017 S1 2016

9%

18%

27%

36%

27%

45%

73%

55%

82%

8%

17%

33%

33%

33%

33%

50%

67%

75%

0% 20% 40% 60% 80% 100%

Other recovery rates

Administrative efficiency

Delinquency rate

Write-offs

Cash collected/active employee hour

Collected cash, total/client

Collected cash, % of debt referred/client

Collected cash, total

Collected cash, % of debt referred

Major KPIs utilized in the B2B Collection process

S1 2017 S1 2016

38%

69%

77%

92%

92%

100%

54%

69%

85%

85%

85%

92%

100%

0% 20% 40% 60% 80% 100%

Risk/Recovery scoring

Controlling

Document management (e.g. full client files)

Management reporting

Process Management steps

Audit logs for client contacting (e.g. call center)

Available details from the customer (contact,…

Areas covered by internal IT support or subject to automation

S1 2017 S1 2016

B2C KPI. In S1 2017 collected cash is still king in terms of utilized KPIs, as the average number of KPI used by a member is 4.

B2B KPI. Similar to B2C, collected cash is the most utilized KPI, with 75% collected cash, % of debt referred being the most frequent. The average number of KPI used by a member remained constant to 3 KPI/member.

IT support and automation. More IT solutions have been used regularly, mainly for client relationship management (used by all members) and support functions, but also for automation and constant improvement of activities, altogether assisting the improvement of collection and success rates.

37

Thank You!

38

AMCC - Asociaţia de Management al Creanţelor Comerciale

Website: www.amcc.roE-mail: [email protected]; [email protected] & Communication: Ana Donea, 0722 214 920

Studiu de piata comisionat catre Ensight Management ConsultingWebsite: www.ensight.roE-mail: [email protected] Manager: Flavia Matei, 0743 856736

http://www.amcc.ro/

mailto:[email protected]


http://www.ensight.ro/


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