Government

Inktel Direct Announces Launch of Inktel Direct Government BPO Services

2009-06-25T07:16:44-07:00

MIAMI, FL -- Inktel Direct, a leading provider of direct marketing services, today announced the launch of Inktel Direct Government BPO Services, a provider of business process outsourcing solutions to federal, state and local government agencies. The mission of Inktel Direct Government BPO Services is to provide local, state and federal government agencies with outsourced business solutions that streamline operations, increase productivity and reduce cost.

"Government agencies face many unique operating challenges not found in the private sector. Inktel Direct Government BPO Services strives to provide our government clients with business solutions specifically tailored towards the needs of local, state and federal government agencies," stated Ricky Arriola, President and CEO.

About Inktel Direct Government BPO Services
Inktel Direct Government BPO Services is a minority-owned company dedicated to providing local, state and federal government agencies with business process outsourcing solutions. Inktel Direct is able to offers its decades of experience with Fortune 500 companies and not-for-profits to help government agencies nationwide effectively and efficiently streamline operations, increase productivity and provide customized citizen care solutions. Our industry-leading combination of technology, training and processes ensures dependable, world-class service. More information available at http://www.inktelgs.com or call 305-523-1100.

About Inktel Direct
Inktel Direct, a leading outsourced provider of business process outsourcing services, was founded in 1997 and services several Fortune 500 companies, federal/state/local governments, not-for-profit agencies and leading organizations. Inktel Direct provides Fulfillment, Contact Center, Direct Mail/Lettershop, E-commerce, and Graphic Design solutions. Inktel Direct is headquartered in Miami, FL with additional operations in Chicago and Ft. Lauderdale. Company news and background information are available at http://www.inktel.com or call 305-523-1100.

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Fed Reflects on Financial Crisis and Its Root Causes

2009-06-24T07:34:38-07:00

The ongoing financial crisis started small, but continued to build on itself until it reached its zenith, according to studies released at the recent Federal Reserve Bank of Chicago conference on Bank Structure and Competition.

“The credit crisis that began in the summer of 2007 is a powerful reminder of the importance of financial market liquidity for macroeconomic stability,” said Arvind Krishnamurthy, author of Amplification Mechanisms in Liquidity Crises. The onset of the financial crisis resulted in the drop of market liquidity, funding liquidity and balance sheet liquidity, leading to a flight to liquidity by investors.

Investors buy secondary markets that are highly liquid, exiting portfolios that are illiquid, and prefer to hold portfolios in short-term, safe claims, such as bank claims that are de facto liquid, according to Krishnamurthy. So investors seek bank deposit, repurchase agreements and commercial paper that can be (relatively) easily bought and sold through banks and hedge funds.

As the crisis deepened, however, the intermediaries – the commercial banks, hedge funds, et al, cut back their lending in order to conserve cash and improve their balance sheets. This need for cash was compounded because consumers and corporate investors – seeing the need for cash themselves -- withdrew their money, money that had provided the intermediaries with a very inexpensive source of funds.

Ran Dunchin, co-author of Costly External Finance, Corporate Investment and the Subprime Mortgage Credit Crisis, pointed out that corporate investment declined with the onset of the crisis, with the biggest declines in those firms with low cash reserves or high debt.

“A shock in one market tightens balance sheet constraints and causes liquidations and falling asset prices in other markets,” Krishnamurthy added. So the tightening of mortgage lending helped contribute to the tightening of other lending, like consumer credit. Credit providers are underinsured for such events, according to Krishnamurthy. He pointed to the relatively low volume (when compared to all credit) of defaulting subprime loans that turned out to be the tip of the iceberg. As subprime loans defaulted, the effects carried through the rest of the credit markets.

Dunchin added that the losses resulted in an increased interest in risk management by financial institutions and a sharp decline in lenders’ willingness to take on risk. So cash holdings in a portfolio were valued more highly than other investments. In fact, cash-rich firms can use such a crisis to increase market share.

Firms that rely most on external financing will be the slowest to emerge from the credit crisis as it wanes, according to Dunchin.

To help avoid a similar financial crisis in the future, Krishnamurthy recommends that regulators limit the leverage of the financial institutions and help ease any liquidity crises by absorbing less liquid assets into its balance sheet and providing more liquid, government-backed assets, such as Treasury bills and bonds, in return.

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Pioneer and ConServe Hold On to Top Spots on ED Contract in May

2009-06-23T07:34:34-07:00

Pioneer Credit Recovery and Continental Service Group (ConServe) remained the top-performing accounts receivable management firms in their respective classifications on the Department of Education’s student loan collection contract in May.

ConServe is also the top overall performer for the life of the contract on the small business set aside, while Pioneer holds the same spot in the unrestricted category.

Pioneer dominated its unrestricted competition – primarily comprised of large ARM firms – by posting a performance score of 97.41 out of 100 possible points for the first two months of the second quarter.

Diversified Collection Service (DCS), NCO Group and Van Ru Credit Corp. were tightly-bunched behind Pioneer with scores in the mid to low 80s.

Pioneer also led the way in total dollars collected in May with $23.2 million brought in with Van Ru, NCO and DCS trailing with $16.9 million, $16.8 million and $16.75 million respectively.

On the small business set aside, ConServe achieved a perfect score of 100 through April and May to take the top spot among the smaller companies collecting for ED. The company’s closest competition was Premiere Credit with 80 total points.

ConServe brought in the most money for ED’s small business set aside with $8.4 million collected in May. Premiere came in second with $6.9 million.

The 17 collection agencies currently on the contract – five on the small business set aside and 12 on the unrestricted contract – have collected $5.82 billion for the Department of Education in the 51 months the contract has been in force.

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U.S. Department of Education Selects Sallie Mae for Student Loan Servicing Contract

2009-06-18T07:45:08-07:00

RESTON, Va.--SLM Corporation (NYSE: SLM), commonly known as Sallie Mae and the nation's saving, planning, and paying for education company, today announced that the U.S. Department of Education has selected Sallie Mae for its Federal Student Aid Title IV Student Loan

Management/Servicing procurement. Sallie Mae was one of four contract awardees.

“We are very pleased to be awarded the opportunity to apply our experience and expertise for the benefit of students and the American taxpayer,” said Albert L. Lord, vice chairman & CEO. “We look forward to being a partner with the Department in this important effort.”

The contract is for the servicing of federal student loans owned by the Department of Education. It does not include loan origination or other Title IV services. The five-year contract is expected to begin in mid-to-late August 2009, and provides for one five-year renewal option at the Department’s discretion.

Although the Department has not yet announced its immediate plans for allocating the initial servicing accounts, Sallie Mae has the immediate scale to add readily more than $100 billion in new volume.

SLM Corporation (NYSE:SLM), commonly known as Sallie Mae, is the nation’s leading provider of saving- and paying-for-college programs. Through its subsidiaries, the company manages $185 billion in education loans and has 10 million student and parent customers. Through its Upromise affiliates, the company also manages $17 billion in 529 college-savings plans, and is a major, private source of college funding contributions in America with 10 million members and more than $475 million in member rewards. Sallie Mae and its subsidiaries offer debt management services as well as business and technical products to a range of business clients, including higher education institutions, student loan guarantors and state and federal agencies. More information is available at www.salliemae.com. SLM Corporation and its subsidiaries are not sponsored by or agencies of the United States of America.

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Obama to Propose Federal Reserve as Super-Regulator in Reforms

2009-06-15T08:09:57-07:00

The administration of President Obama is expected to recommend sweeping reforms of the financial services and banking industries this week as promised. But according to the Wall Street Journal, the Federal Reserve has been marked as an important part of the new regulatory environment being proposed.

Officials are saying that the recommendations are in a “white paper” that will be released Wednesday. In it, they propose to increase the power of the Fed to oversee the largest financial institutions.

Part of the plan also involves giving the government power to break up large institutions that have failed, like the FDIC’s power over banks, and creating a new regulator that would specifically monitor consumer credit products. The plan would call for an end to the Office of Thrift Supervision.

While the plan does not go as far as many expected, it is thought that it will meet will stiff resistance, according to The Journal. At the heart of the opposition will be increased power for the Fed, an institution already under scrutiny from many. (Editor’s Note: insideARM will be detailing some of that scrutiny in a feature slated to run Wednesday)

Details of the plan are guarded, with “those close to the situation” being quoted by The Journal. Also included in the plan is a council that will oversee “financial institutions, products, or practices that could pose a systemic risk to the economy.” But this will also be the purview of a newly empowered Fed, and it is not clear whether the council or the Fed will have final say on tactical moves.

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A Government Collection Contract that Can Change an Agency Forever

2009-06-04T10:52:02-07:00

Eight years ago Continental Service Group, Inc. (ConServe) set out to become an unrestricted contractor for the U.S. Department of Education (ED). It is a lofty goal worthy of pursuit given its potential rewards.

ED says its Federal Student Aid (FSA) program is the equivalent of the 9th largest bank in the U.S., with a loan portfolio in excess of $100 billion. It can provide more than $50 billion in financial aid every year to postsecondary students, including more than $30 billion in new loans and more than $7 billion in Pell Grants. Snagging a federal student loan contract with ED can significantly boost a company's collection portfolio and its visibility, setting contract winners on the path to exponential growth.

In January, Fairport, N.Y.-based ConServe reached its goal, being named one of 17 unrestricted contractors tapped to help the FSA collect billions in delinquent student loans ("ED Announces Debt Collection Contract Winners in Unrestricted Category," Jan. 9).

“It’s very rewarding to have a long term goal come to fruition,” ConServe’s CEO Mark Davitt told insideARM.

Coast Professional, Inc. (Coast) COO Everett Stagg echoed those sentiments. In March, the company learned it was one of four new small business contractors selected for the ED contract ("Department of Education Names Small Business Collection Contractors," March 11), which could significantly boost the company’s revenues and client portfolio over the next few years.

“You will have an opportunity to work with other high profile clients if you do a good job. And you have the ability to expand,” Stagg said.

That has certainly been ConServe’s experience. The company has worked in student loan debt collections since 1985, but mostly on a regional level before receiving its first ED contract in 2004. Davitt expects ConServe’s new four year contract with ED will help take the company to a whole new level in the student loan collection space.

ED’s 17 unrestricted ED contractors will work 88 percent of the ED’s delinquent student loan debt. And because placements are competitive and performance based, the better a company performs the more business it can earn.

“Our goal is to be the top performer on this contract,” said Davitt, who added that ConServe had to demonstrate it had the financing backing to support the business growth the contract brings.

ConServe’s competition includes heavyweights NCO Group. and Pioneer Credit Recovery, Inc. Conserve has already demonstrated it can deliver on the contract; the company obtained the ED’s top performance ranking and has been the ED’s top rated agency among small business contractors.

Davitt said the visibility and ConServe’s new status as an unrestricted ED contractor helped it recently win new business with some state student loan guaranty agencies. He said the company’s 310 employee base could grow to as many as 600 over the next two years.

“The federal contract is so public and open. People can see what’s going on and how performance has been,” Davitt said. “It’s better than a sales person saying we’re doing a good job when you can point to public records saying we’re doing a good job.”

Stagg agreed saying the ED contractor presents huge opportunities and huge risks for small agencies. The Anaheim, Calif.-based company is preparing for growth.

In August, Stagg – along with partner and Coast CEO Brian Davis -- will open a new facility in Geneseo, N.Y. and hire workers that will help work the ED contract and handle new business when the company is ready to expand. He said Coast could potentially employ as many as 250 workers at its offices in West Monroe, La. and Geneseo just to support the ED contract.

But as quickly as an ED contract can elevate an agency’s revenue and stature in the student loan space, it can lead to a company’s downfall if the operations and performance isn’t managed well, Stagg said. Coast will have invested about 12 months of preparation and $2 million in security and software before it even begins collecting on the ED contract this fall, Stagg said. Some of the financing will come from Coast’s cash reserves. But the size of the investment, due to new security requirements, could mean that ED contractors will operate in the red a lot longer than prior ED contracts, Stagg said.

Account Control Technology, Inc. (ACT) president Donald Taylor agreed that an ED contract is an award that doesn't' come cheaply. Because of the new security requirements, he estimates it could take ED contractors as much as 24 months to break even.

But the eight year relationship has benefitted the company, headquartered in Canoga Park, Calif. ACT went from 40 employees when it won its first ED contract in the small business category in 2000 to about 250 today as the company won ED volume and won new business from state guaranty agencies, colleges and universities, Taylor said. And, like ConServe, the company was moved to the unrestricted ED contract this year. Taylor said ACT's new unrestricted contract will likely mean staff will increase 100 percent.

"From our perspective, you make such a large investment, but it's a bet on the future," Taylor said. "It's the single largest contract in the country."

Given the enormity of the changes and Coast’s commitment to perform well for the ED and its existing customers, the company will not pursue any new business in the next two years, Stagg said.

“Something that makes you laugh can make you cry if you don’t do it right. I know of several companies that have had an ED contract that are no longer in business,” Stagg said. “Failure is not an option.”

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Sagres/Union Adjustment Venture Wins Approved Bidder Status from City of Los Angeles

2009-06-03T06:40:01-07:00

The City of Los Angeles has selected The Sagres Company of San Diego, California and The Union Adjustment Company of Burbank, California (a joint venture of the two accounts receivable management firms) as a single qualified party to purchase Delinquent Accounts Receivable from the City. The Sagres/Union Adjustment venture represents over 70 years of experience in the management of accounts receivable, including Federal and local government accounts.

Lloyd Dix, VP at Union Adjustment said, "There is a mutual benefit inherent in an effective partnership between California business and government. Federal, State and local agencies can find greater efficiencies by using private sector sources that specialize in areas such as non-paying receivables. This allows Government groups to concentrate on their traditional core mission of providing services for the public good.”

Tom Ferris, CEO of the Sagres Company said, “The City of Los Angeles has demonstrated vision and leadership by bringing otherwise valueless assets to the marketplace in exchange for immediate capital during these critical economic times. I expect other government leaders may look to this example as a first step in implementing improved fiscal controls.”

For more information about The Sagres Company and Union Adjustment, please visit www.sagresco.com and www.unionadjustment.com.

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Pioneer Credit Regains Top Spot on ED Collection Contract to Start Q2

2009-06-02T12:17:44-07:00

Pioneer Credit Recovery was the top performer on the Department of Education’s student loan collection unrestricted contract in April after being bested by NCO Group and Allied Interstate in the first quarter.

Continental Service Group (ConServe) remained the top performer on the small business set aside contract.

Pioneer posted a strong start to the second quarter of 2009 by obliterating the competition on the unrestricted contract – comprised mainly of large ARM companies -- with a score of 97.95 and total collections of $20.6 million in April. The next closest competitor was Van Ru Credit Corp., with a score of 84.66 and collections of $16 million. NCO trailed Van Ru for third.

ED’s performance scores are based on a weighted average of performance metrics, including total dollars collected, total accounts serviced and administrative resolutions. The scores are released each month, but compiled for internal scoring on a quarterly basis. Final quarterly rankings determine bonuses and account placement levels.

On the small business set aside, ConServe achieved a perfect score of 100 in April to take the top spot among the smaller companies collecting for ED, although Account Control Technology brought in more money -- $6.85 million compared to ConServe’s $6.79 million.

Overall, recovery rates were better in April 2009 than in April 2008, marking a reversal of the collection deterioration shown in the first quarter (“NCO Edges Out Allied Interstate for Top Spot on ED Collection Contract for Q1,” May 4). Pioneer’s recovery rate of 1.84 percent – the highest among all collection agencies – was better than the top rate of 1.62 percent in the same period a year ago. Agencies receive all of the collection inventory for an entire quarter at the beginning of each period, so recovery rate improve throughout the month.

The 17 collection agencies currently on the contract – five on the small business set aside and 12 on the unrestricted contract – have collected $5.64 billion for the Department of Education in the 50 months the contract has been in force.

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No White Flags Surrendering to Possible Identity Theft Here � Gila Corp Gets Red Flag Compliant

2009-05-28T06:49:36-07:00

Austin, Texas - Gila Corporation, a nationwide leader in receivables management and business process outsourcing solutions, is pleased to announce the successful completion of the Red Flag Identity Theft program. The company has been certified Red Flag compliant in accordance with the FTC Fair and Accurate Credit Transactions (FACT) Act #114. This program helps to identify, respond to and mitigate identity theft from each area of the company.

“Ethical collection practices are a top priority at Gila, and adhering to federally approved identity theft prevention practices is another way we maintain our high ethical standards,” said Patrick J. Swanick, Chief Executive Officer of Gila Corporation. “Completing this program assures our clients that we have both strict and appropriate measures in place to protect the integrity of their sensitive information,” Swanick added.

Gila Corporation serves the government sector through its Municipal Services Bureau (MSB) business unit and the financial services sector through its Gila Group division. Each individual department at Gila Corporation has completed a Red Flag policy and all departments have been combined into a corporate Red Flag Rules Compliance; which will be reviewed annually.

About Gila Corporation
Founded in 1991, Gila Corporation is a leading nationwide provider of receivables management and business process outsourcing solutions. Headquartered in Austin, Texas, the Company offers outsourced collections, payment processing and call center services to governmental entities, financial services clients and higher education institutions across the country. Through its strategic business units, Municipal Services Bureau (MSB) and Gila Group, the Corporation empowers more than 350 talented employees with advanced technology, data management tools, and leading edge business practices to exceed the expectations of its clients. MSB collects delinquent court fines, fees and debts for a wide variety of governmental entities. Gila Group specializes in outsourced collections and customer service functions for financial institutions.

Gila Corporation distinguishes itself based on its Experience, Execution, and Ethics; the firm has also achieved ACA International’s Professional Practices Management System (PPMS) certification. Currently less than 1% of the more than 7000 collection agencies provide the benefits of this certification to their Clients. For more information, please visit www.GilaCorp.com or call # 1-800-568-7004.

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If its Good Enough for the British�

2009-05-22T07:33:59-07:00

This week, Her Majesty’s Revenue and Customs (HMRC) – the British equivalent of the IRS – announced that it would begin a six-month trial program that will see it outsource select tax debt to private ARM firms for collection.

What??? Don’t they know that doesn’t work? Perhaps they should have consulted with their counterparts across the Pond before embarking on such a crazy scheme.

Speaking of the IRS, Commissioner Shulman offered a feeble defense for the U.S. tax agency’s decision to cut its ties with private collectors. Speaking before the House Appropriations Subcommittee on Financial Services Tuesday (he was there to implore Congress to increase the IRS budget for 2010), Shulman said that the program was shuttered in the interest of a “unified collection program.”

He insisted that the decision to kill the program wasn’t political.

Shulman explained that IRS employees had a lot more power than the private collection agencies they hired. So the IRS decided to get rid of the collection agencies. He also noted that the private debt-collection initiative was created when IRS had a backlog of $7.3 billion in collections, which has since shrunk to about $3.6 billion (a sidenote: I love that the IRS commissioner thinks that a backlog of “only” $3.6 billion is a solid reason for abandoning a program specifically designed to whittle away at the backlog).

It’s bizarre that at a time when more governments in the U.S. – and the world – are turning to private collectors to help with revenue issues, the IRS has suddenly fallen in love with the concept of keeping it all in-house.

But before we call the British program a success, it should be noted that their initiative certainly has its detractors. The London Times reported this week that consumer groups in the UK have already voiced their displeasure. “Debt collection is still an industry that, with some notable exceptions, in many ways seems to thrive and function by creating a climate of fear,” said Chris Tapp of debt charity CreditAction.

It will be interesting to see how the pilot goes and if success could lead to the IRS rethinking their stance on private collectors.

Philly Fed Firms Continue to See Weakness

2009-05-21T07:32:03-07:00

Philadelphia -- The region's manufacturing sector continued to show weakness in May, according to firms polled for this month's Business Outlook Survey. Although the indexes for general activity, shipments, and employment improved, the index for new orders declined slightly. Firms reported decreases in input prices and prices for their own manufactured goods; however, the corresponding price indexes rebounded slightly from their record lows last month. Most of the survey's broad indicators of future activity improved notably again this month, suggesting that the region's manufacturing executives are more optimistic that a recovery will occur over the next six months.

Most Current Indicators Less Negative This Month

The survey's broadest measure of manufacturing conditions, the diffusion index of current activity, increased from -24.4 in April to -22.6 this month. Although an indication of continued overall decline, this reading is the index's highest since last September; it has now edged higher for three consecutive months. Still, the index has been negative for 17 of the past 18 months, a span that corresponds to the current recession (see Chart). The new orders index remained negative this month and was the only broad indicator that did not show improvement (it declined two points). The survey's shipments index, however, rose 17 points, increasing from its record low reading of -35.7 in April to -19.0. The survey's current inventory index improved for the second consecutive month, increasing 12 points (the index is now 27 points above its record low reading in March). The survey's delivery times and unfilled orders indexes were little changed from last month, suggesting continued weakness.

Responses this month suggest that employment losses have moderated from April. The current employment index, although still negative, increased 18 points. Still, 35 percent of firms reported declines in employment this month; only 8 percent reported increases. The average workweek index also improved this month, increasing 18 points, to -23.2.

Price Indexes Reflect Weakness

Firms continued to report widespread declines in the prices paid for inputs and the prices received for their own manufactured goods, although corresponding price indexes rebounded somewhat from the record lows reached in April. Twenty-four percent of the firms reported paying lower prices for inputs, down from 36 percent last month.

Only 1 percent reported paying higher prices this month. Over 36 percent of the firms reported receiving lower prices for their own manufactured goods; 3 percent reported receiving higher prices. The prices received index remained negative for the seventh consecutive month, although rebounding eight points from its record low of -41.4 in April.

Six-Month Indicators Show Continued Improvement

Broad indicators of future activity showed improvement again this month. The future general activity index remained positive for the fifth consecutive month and increased 11 points, from 36.2 in April to 47.5. The index has now increased 33 points in the past two months (see Chart). The indexes for future new orders and shipments also improved, increasing 13 and 14 points, respectively. For the first time in eight months, the percentage of firms expecting employment to increase over the next six months exceeded the percentage expecting declines (26 percent versus 16 percent). The future employment index jumped 22 points, to its highest reading since last September. The six-month capital expenditure index showed a modest four-point improvement, increasing for the second consecutive month; at -0.2 the index is 22 points higher than its record low in March.

In special questions this month, firms were asked to characterize the underlying demand for their manufactured goods over the past two months (see Special Questions). The percentage of firms experiencing decreases in demand over that period (56 percent) was significantly greater than that of firms experiencing an increase in demand (24 percent). Among those firms experiencing current declines, however, 32 percent indicated that the rate of decline had moderated; 17 percent said declines had grown more severe. When asked when they expect an increase in demand for their products, the largest percentage of executives (45 percent) indicated that the increases are six months or more in the future. Twenty percent said increases will occur in four to five months; 14 percent said in two to three months.

Summary

According to respondents to the May survey, activity in the region's manufacturing sector continued to decline this month. But evidence that declines are moderating was again present. While the broad indicators remained negative, most have improved from April. Responses to special questions offered corroboration that declines have been moderating for a significant proportion of firms. Most broad indicators for future business conditions improved markedly again this month, suggesting that an increasing number of the region's manufacturing executives expect a recovery in business activity before the end of the year.