Opportunity Knocks For Debt Men
Sydney Morning Herald
Sunday March 26, 1989
While many Australians are buckling under the weight of rising interest rates, not everyone is cursing the times.
Among the few winners in the battle for prosperity are debt collectors -people who insist they are not a pack of ghouls, but rarely receive a warm welcome when they come knocking at the door waving a summons or wanting to take away the new fridge.
One can't help getting the impression they are rather pleased with things at the moment. They're doing boom business.
Because of Australians' weakness for using credit, even when we can't afford it, the legion of debt collectors - they call themselves mercantile agents - is overworked.
"It seems to be an expanding area of opportunity," says Mr Norman Owens, national president of the Institute of Mercantile Agents Ltd. "High interest rates are undoubtedly one of the reasons companies get into trouble. They just can't cope with the cash flow."
But the "expanding area of opportunity" for debt collectors is not just related to companies. Tough economic times mean public schools and hospitals are starting to call in debt retrievers, as are organisations such as Telecom, which in the past had a softer line on small debts.
In fact, mercantile agents are waiting anxiously to see who is awarded the new Telecom contract for debt retrieval - a contract which should return more than $1 million to the agents involved.
Each year Telecom chases up about $36 million of bad debt, but expects only to retrieve about 30 per cent. A mercantile agent's fee would be 10 to 30 per cent of this, depending on the arrangement.
The age of economic rationalism means everyone is watching outlays, especially those bodies which have lost government funding. In turn, this means that while once a public school would tend to write off a debt, these days it consults a mercantile agent to look through the bad debts and advise on which ones should be pursued and which ones written off. Sometimes it is more cost-effective to write off a debt rather than take expensive legal action with little chance of retrieving the money.
If there is a downside to the present economic squeeze for mercantile agents, it would be the increased possibility of finding themselves in unpleasant situations.
Mr Henry Stewart-Koster, from Hunter and Stewart, was given a "reasonably severe" beating in his early days on the job. What Mr Stewart-Koster had not known was that the man he visited to serve a summons on for a bad debt had earlier that day had his car and caravan repossessed. It also was late on a Friday afternoon, when seasoned agents prefer to do paperwork. Experience shows there is a danger the person they are visiting may be affected by alcohol.
Big-ticket items for mercantile agents include motor accidents and credit card accounts.
About 10 to 15 per cent of people at fault in car accidents are not covered for damage to other vehicles, so some people whose vehicles are damaged engage agents to chase up money owed for repairs.
© 1989 Sydney Morning Herald