Most ground-up collection agencies chart a slow-growth strategy. Then, there's Talbott, Adams & Moore.
Start-ups generally make sure a business line is profitable, or at least financially stable, before considering taking on new ventures. This measured approach also helps ensure employees are well trained to handle the work.
But Talbott, Adams & Moore in San Antonio, Texas, launched with bold plans in 2002, adopting a multi-faceted business plan from day one. What began as a third-party collection agency soon added many layers: debt buyer, customer service specialist, skip tracer, auditor/consultant and global competitor.
Next up? Software developer. "We want to be different than most agencies. By growing our business in several areas, I think we have set ourselves apart from competitors," says Phillip Spears, chief operating officer and one of the co-founders of the business.
The agency's entrepreneurial gusto has created many growth opportunities for employees. The owners, meanwhile, continue to dream big.
This year, Talbott, Adams & Moore's goal is to buy $500 million in debt – an ambitious figure that, if achieved, would vault the company into the top tier of debt buyers. At mid-year, the agency had purchased only a fraction of the goal at $20 million, but was deeply involved in funding and purchasing negotiations.
The agency began buying bad debt, both credit cards and non-credit cards, direct from creditors in 2004, purchasing portfolios from various companies and collection agencies and then either collecting on the accounts or sending them to lawyers. "We own the debt and we can choose to hand it over to our attorneys, who can go ahead and start filing lawsuits on individuals who don't want to pay," he says.
Equally important to the agency is the planned software development expansion. While the owners ultimately want to sell the software to collection agencies and financial institutions, pushing into this niche is part of a strategy to reduce expenses.
"When you have the kind of rampant growth we've experienced, you want to be serviced correctly. When you're not, that hurts you," Spears says. "You're charged by the number of seats you have so that cost soars and then there's the issue of technical support. By having our own software we'll have unlimited growth potential and the technical support – with the help of our partners in India – won't really cost us anything. When you write your own code you can then get in and fix any problems fast. We saw this as a potential huge savings."
In 2004, Talbott, Adams & Moore opened a call center in Montego Bay, Jamaica. The office specializes in skip-tracing accounts on which the U.S. collections team could not find contact information. "It's just like the old days. We manually skip-trace by locating near-bys and the relatives and then we verify phone numbers," Spears says.
The Montego Bay office has about 100 employees, including 30 who specialize in the actual skip-tracing work. Once they find valid contact information, those accounts are returned to the San Antonio team for collections.
"We chose to go offshore after exploring the idea of how to gain an advantage over other collection agencies," Spears says. "Actually, our first in-house attorney was from Jamaica and he asked me, 'how would you like great weather, pay under $6 an hour and not pay tax on your profits?' "
With the average salary at $12 an hour in the U.S. office, the agency essentially can afford three to five employees in Jamaica for every one employee in the U.S. "We figured out that because we could pay the rate in Jamaica, which is still higher than the average wage, we could afford to raise the pay for our employees in the states – which we indeed did," he adds.
"Just as importantly, we have not lost one American job. In fact, we have been able to gain 10 jobs because of our expansion in Jamaica," he says.
The global growth did not stop in Jamaica. In 2007, the agency negotiated long-term strategic business alliance agreements with Toptel, a customer service and call center in Mexico City and Monterrey, Mexico, and Toptel's subsidiary Aló. The agreements, Spears says, grant the company access to 1,250 bilingual customer service, management and support personnel.
What's more, the agency is working to open another international office in South America. The exact location is confidential for now but Spears expects the company to hire 25 people to start. In the U.S., the agency employs 35 people.
Several challenges await the collection industry, believes Spears, and Congress and the legal system will be at the heart of many of them. "What will Congress do about some of the inequities in our industry? It's always been that consumer rights trump everything," he says, "but I'd be interested to know if a new Congress will come in and if they can help us out."
A pressing concern, he says, is that while the Fair Debt Collection Practices Act and various laws say parties wronged by the collection industry can seek restitution from both the company and the individual collector, the legal system (attorneys) always chases the company.
"To change our industry, someone has to hold the individual collector responsible, but of course the lawyers know that the individual collector doesn't have the deep pockets like a company. What happens in the industry is that the rogue collectors then go from one company to the next with little or no repercussions."
Despite rapid growth at Talbott, Adams & Moore, opening a call center in Jamaica was more than a simple impulse decision. The agency felt the potential success of the expansion hinged on finding someone with extensive knowledge of the country and experience working there.
They found Jack Rosenthal, who lived in Jamaica for about 10 years as an employee/manager of two national agencies and hired him as vice president in charge of the Jamaica office. He has since been promoted to executive vice president.
Rosenthal had developed strong relationships in Jamaica, so Phillip Spears had him sign a 10-year employee agreement with the idea of helping build continuity in the country. "That's a huge plus for us, to have Jack's experience in Jamaica," Spears says. "It helps earn the trust of employees (stability), who are counting on you to stick around. And people of the country want to see that familiar face."
Business in Jamaica does not operate like it does in the U.S. Sometimes companies need to barter to get work accomplished. Rosenthal knows how to do this.
"People there have seen far too many U.S. companies open operations, plug in an American manager for a few months or a year, and then replace that person," Spears says. "That kind of turnover – a rotating cast of managers – doesn't do you any favors in Jamaica."