TURNING IDEAS INTO ACTION: ARA ANNOUNCES THE ARA INDUSTRY SUSTAINABILITY INITIATIVE
The American Recovery Association (ARA) is taking action to address the growing financial pressures threatening the sustainability of professional recovery agencies nationwide.
ARA is announcing the establishment of the ARA Industry Sustainability Initiative, a national effort led by ARA Board Member Dom Clegg to document the true cost of providing professional recovery services, bring industry concerns directly to executive-level decisionmakers, and pursue meaningful solutions to an increasingly unsustainable business model.
For years, recovery agencies have faced escalating costs for fuel, insurance, labor, equipment, technology, facilities, and compliance while compensation has struggled to keep pace. At the same time, expectations for professionalism, safety, training, and accountability continue to rise.
We cannot continue demanding higher standards while failing to recognize the cost of meeting them.
This initiative is designed to move beyond repeated conversations and individual requests for assistance. ARA intends to establish an organized, fact-based effort that documents the financial realities of operating a professional recovery agency and puts that information directly in front of the people who can make a difference.
The objective is simple: Make the financial sustainability of professional recovery agencies an issue that industry decisionmakers can no longer afford to ignore.
WHY ACTION IS NECESSARY
Two weeks ago, ARA Board Member Dom Clegg shared a post addressing the rising cost of doing business in the repossession industry. His message included actual operating numbers and highlighted a problem that has been growing for years.
I fully support Dom’s message and believe it reflects what professional recovery agencies across the country are experiencing.
The reality is that nothing is going to change until either there are no longer enough qualified, professional recovery agencies available to perform the service, or lenders, forwarders, and other industry stakeholders recognize that the current business model is becoming unsustainable.
None of us should wait for the first scenario to become reality.
We have spent years elevating this profession through better training, stronger compliance, improved safety, technology, and greater accountability. Today’s professional recovery agency operates at a level that would have been unimaginable 15 or 20 years ago.
But there is a cost associated with professionalism, and that cost must be recognized.
THE ISSUES WE MUST ADDRESS
Annual Fee Adjustments
Since COVID, ARA Vice President Marcus Potter has consistently advocated for incorporating annual escalators into recovery service fee structures. I believe this is an important part of the solution.
Individually negotiated annual fee adjustments would allow recovery agencies and their lending and forwarding partners to account for inflation and increasing operating expenses through smaller, predictable increases.
Rather than allowing costs to accumulate over five, ten, or even twelve years before agencies request substantial rate adjustments, annual escalators could help maintain more sustainable compensation structures while allowing clients to better anticipate and budget for those increases.
We should not have to wait until an agency reaches a financial breaking point before compensation is reconsidered.
ARA’S ACTION PLAN
The ARA Industry Sustainability Initiative will focus on eight areas of action:
- Commission an Independent National Industry Cost Study
ARA will seek to commission an independent study examining changes in recovery agency operating expenses over the past 10 to 12 years.
The study will evaluate increases in labor, insurance, equipment, facilities, fuel, technology, compliance, and other essential expenses.
The goal is to develop credible, independently researched data demonstrating the financial realities of operating a professional recovery agency.
- Document the Financial Impact of Uncompensated Work
We will examine the expenses associated with unsuccessful assignments, repeated recovery attempts, extended travel, investigations, and administrative requirements.
These costs must be included in any meaningful discussion about the sustainability of professional recovery services.
- Publish an Industry Sustainability Report
ARA will work toward developing an annual report presenting aggregated industry findings, operating-cost trends, and challenges affecting the long-term viability of recovery agencies.
This report will be shared with lenders, forwarders, insurers, and other industry stakeholders.
We need to move beyond telling our partners there is a problem. We need to document it and put the information in front of those who can make a difference.
- Establish Executive-Level Engagement
ARA will seek formal meetings with senior executives and decisionmakers at lending institutions and forwarding companies. We need to reach the people who have the authority to make decisions.
We will present our findings, discuss the challenges facing recovery agencies, and encourage meaningful solutions.
- Promote Annual Fee Escalators and Sustainable Contract Structures
Building on Vice President Marcus Potter’s longstanding recommendations, ARA will encourage lending institutions, forwarding companies, and recovery agencies to consider individually negotiated annual fee adjustment provisions.
These provisions could account for inflation and changing operating expenses while creating greater financial predictability for both recovery agencies and their clients.
The objective is not to establish uniform industry pricing. Each business must independently negotiate its own rates and contractual terms.
- Address the Fuel Crisis Immediately
ARA will continue engaging lenders and forwarding companies that have yet to provide fuel assistance while recognizing those partners who have stepped forward.
We will also continue advocating for fuel consideration across all recovery services, including involuntary recoveries, voluntary recoveries, and impounds.
- Establish an Industry Sustainability Task Force
I will be asking the ARA Board of Directors to authorize an Industry Sustainability Task Force, led by Dom Clegg, to oversee this initiative. The task force will develop a research plan, identify independent research partners, propose a budget and timeline, and establish a stakeholder engagement strategy.
The initiative will operate under ARA oversight, with appropriate legal guidance and safeguards protecting confidential business information and ensuring compliance with applicable competition laws.
- Establish Measurable Goals and Accountability
ARA will work toward establishing clear objectives, timelines, and regular updates to our membership.
We will report on research progress, stakeholder engagement, and developments resulting from this initiative.
A MESSAGE TO OUR LENDING AND FORWARDING PARTNERS
The purpose of this initiative is not to create conflict between recovery agencies, lenders, and forwarding companies. We need each other, and I recognize that our partners face financial pressures of their own.
However, a partnership cannot remain sustainable if the financial realities of one side are continually overlooked.
We are asking you to look beyond the immediate cost of an assignment and consider the long-term consequences of losing qualified recovery agencies, experienced employees, and reliable service coverage.
We encourage our partners to consider forward-thinking solutions, including annual fee escalators, fuel assistance, and compensation structures that better recognize the cost of providing professional services.
Most importantly, we are asking your executive leadership to become directly involved.
The cost of ignoring this problem today may be far greater than the cost of addressing it.
A MESSAGE TO ARA MEMBERS AND FELLOW AGENCY OWNERS
We also have a responsibility. We need to understand our operating expenses, participate in this initiative, and contribute to an accurate picture of the financial challenges facing our profession.
Every agency operates differently, and each business must independently determine what is financially sustainable for its operation. But we can all contribute to a better understanding of the issues affecting our industry.
ARA cannot do this alone. We need our members engaged and willing to help move this initiative forward.
If you are passionate about the future of our industry and want to be part of the ARA Industry Sustainability Initiative, I encourage you to get involved. We are looking for individuals willing to contribute their knowledge, experience, and time to help drive meaningful change.
To express your interest in participating, contact Dom Clegg directly at dominic.clegg@americanrecoveryassn.org.
One Industry. One Voice. One Professional Standard.
Todd Case, ARA President
