Defining The ARM Industry

When reading headlines, people tend to use “The Debt Collection Industry” when referring to our industry. This is understandable, but not accurate. Debt collection is one of the biggest aspects in our industry, but it’s not all we do. Like the road that we need to navigate in order to reach our goals, it’s not straightforward.

Descriptive but not Definitive

To give you a little bit of perspective on how misleading and vague the term “debt collection industry” is, let me give you an example. Let’s say plumbers, even if they always deal with pipes, we don’t call them the “pipe industry”. It’s confusing people.

Our industry is formally called the ARM Industry. ARM means Accounts Receivable Management. Accounts Receivable, in simplified terms, are debts owed to a business. And collection is one form of managing those debts. 

Debt Management

One of the major points I emphasize on my articles is how our industry is largely misunderstood by people. And when I say people, it’s outside and inside our industry. Yes, ultimately it leads to collection. But collection is only the goal, not the purpose.

As I have said before, the ARM industry deals more in relationships rather than data. Because if you think about it, ARM industry professionals work to fix and strengthen the relationship between debtors and creditors. That is how we manage the situation properly. Let’s illustrate this further. 

Let’s say that your manager is great at reaching the company goals, but is very crass and rude to you and your teammates. Would you call that “good management”? No, right? Because a big part of management is maintaining good relationships.

Accounts and Relationship Management

Success in our industry can only come from managing relationships properly and it’s a very challenging and demanding feat.

When industry professionals get called for their service, they get placed in a very precarious situation at the worst possible time in fixing a relationship: when it’s already sour. And it becomes more complex by the time we get involved.

Basically, we try to balance a nested relationship. We first try to fix the relationship between the creditor and debtor by trying to understand the situation. We try to communicate with the debtor, try to determine why they failed to pay, and then relay that information to the creditor.

And then that’s when it becomes harder. If the debtor doesn’t want to talk, how can you still save the relationship? If the debtor does talk but the creditor refuses to give payment options, how can you save the relationship? It’s about finding the perfect balance of making the debtor pay, making the creditor get the payment, and trying to retain their relationship.

Doesn’t sound too easy now, right?

A Deeper Understanding Instead of Redefinition

So if we really define the ARM industry, it really means Accounts and Relationships Management more than Accounts Receivable Management. But as the title suggests, I didn’t come to redefine our industry’s acronym. I’m just defining what it really means, giving context and hopefully a deeper appreciation to our heavily misunderstood industry.

Let’s talk more about this. Message me here or email me at [email protected]