More Business Owners Turning to Collection Agencies

While many self-employed professionals, small business owners and entrepreneurs are working hard to find ways to survive the economic downturn, one business sector is setting new records due to the recession.

Business owners in the collections industry report the recession is creating record-setting business conditions.  The economic downturn is historic because business owners and entrepreneurs that have never had trouble collecting payment from clients are now facing the worst cash crunch the collection industry has ever seen according to industry insiders.

According to the latest numbers from the Commercial Collection Agency Association, the dollar totals placed in collection by one business against another soared to almost $4.7 billion in the second quarter nationwide!  That’s up almost 40 percent from $3.35 billion for the same period last year.

Last year was also a historic year for commercial collection agencies. A record $14.3 billion in business accounts nationwide were placed in collection in 2008, a 23.2 percent increase from $11.6 billion in 2007 according to the Commercial Collection Agency Association.

While the amounts continue to rise, collection firms report rising bankruptcy filings are making it very difficult to recoup the money.

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CIT Group Questions Concern Many Business Owners & Employees

The fight for small business credit is getting tougher.  CIT, historically a top financer for small firms, faces potential bankruptcy.  For more than six months, CIT has virtually ceased making new loans –leaving business owners with few options.

The CIT situation is tricky for President Barack Obama and his economic advisors: the White House does not want to bail out every struggling company and CIT needs about six billion dollars after reporting eight quarterly losses in a row. However, refusing the small business lender may appear like the Obama administration is turning its back on small business.

The collapse of CIT will have a huge impact on supply chains. CIT serves as financial middleman to about sixty percent of retailers…..more than three hundred thousand businesses nationwide.

About fifteen million Americans work in retail trade, more than ten percent of the labor force. But impact of the CIT bankruptcy doesn’t end with job loss; it could mean poorly stocked shelves for the upcoming winter holidays because retailers’ credit and supply chains would be disrupted!