Okay, here it is: when creditors try and get “cheaper” repossession agencies to work for LESS (or contingent), they are actually blowing away thousands… even millions… of dollars.
This is not a joke, or even a modest exaggeration.
Creditors are often not paying attention to the one number in the equation that makes the biggest difference of all.
So it might go like this. Some accountant upstairs tells the collection department to “get their repossession costs down”, period. So the collection manager decides to start assigning repo accounts on a “contingent” basis in order to get lower repo costs. Seems like a less costly option, right?
The problem is this: that, statistically, this lowball process loses hundreds of thousands of dollars in small portfolios…and millions in a larger ones.
If a client goes through a “contingent” forwarder, and has a recovery ratio of 45% (which is an actual number that’s used), the contingent forwarder would recover 90 cars, worth $900,000.00 total. Since they work for $275 “contingent”, you don’t pay those pesky close fees, and your total recovery fees are $24,750.00. You have come out $875,250.00 ahead!
Falcon International is an investigation and repossession agency with a certified recovery rate of 68%. We do charge a close fee, and we don’t work contingent. This means we get to work with true fellow professionals, and good businessmen & women who value service over raw price. So you would think using a firm like ours simply “costs too much”.
But…..with this same portfolio, we would recover 136 of your cars, worth a total of $1,360,000.00. You would have paid us around $40,000 more to get those numbers (which is what the accounting department would historically be focusing on).
But the bottom line is this: Falcon International would have recovered an additional $421,000.00 to the bottom line even on this tiny portfolio.
What’s the takeaway? The number that really matters is the recovery ratio. The difference in overall repo fees winds up being almost insignificant. Even if a forwarder only charged the creditor a $35 repo fee contingent, using a company like Falcon International would still come out ahead. By a long shot.
Pull out your calculator and check it out yourself!