Tailor Your Collection Strategy for Changing Economic Cycles

Jul 20, 2023


Like most businesses, collections firms can be impacted by changing economic cycles—fluctuations in the economy from expansion to contraction. Understanding how economic cycles impact your firm and recognizing signs of changes can help you minimize the impact to your business and, ideally, remain profitable.

Impact of Economic Changes

Depending on the phase, you firm may face increase payment plan defaults, a shift in the types of debts available, and changes in government regulations. Your clients may also experience reduced profitability. Maintaining strong client relationships may require you to adapt your strategies to align with their needs.


Inflation decreases the purchasing power of money, which can impact collection firms in a several ways.


Declining economic activity can affect account recovery and client relationships. Collection agencies may experience:

Economic recovery and expansion

After a recession, the economic experiences positive growth and improvement. There are opportunities and risks to watch for during this period.

Strategies for Economic Peak and Downturn

Closely monitor economic indicators like unemployment rates, GDP growth, interest rates, and consumer confidence. Staying informed allows you to anticipate changes and adjust strategies accordingly.

Economic peak

During the peak of the economic cycle, collection agencies may be able to take advantage of favorable economic conditions to grow their businesses and improve profitability.

Economic Downturn

One of the biggest risks that collection agencies should watch out for at the peak of the economic cycle is the possibility of an economic downturn.

Prepare With Flexible Payment Options

Regularly assess the economic environment as part of your regular business planning. Being agile, proactive, and adaptable can help you successfully navigate each part of the changing business cycle.

Review and update your risk assessment models to account for changing economic conditions. This way, you can identify high-risk accounts and adjust your strategies, for example by offering more flexible repayment options to consumers. Consider using automated payments solutions like HealPay’s Treatments to target accounts and offer customized payment options that fit the consumers’ needs based on the current economy.