monthly Kaulkin Ginsberg Index for the accounts receivable management
business reached an all-time high of 1472.7 as April ended, the
collection industry consulting firm reports. The increase, the highest
since the index began in January 2000, was attributable mainly to the
sharp decrease in bankruptcy filings during the first quarter as
compared with the fourth quarter of last year, says Paul Legrady,
director of Kaulkin’s research group.
The April level represents a 20.5% jump from the prior month. With bankruptcy filings returning to more normal levels this year, however, the index gain could soon be in for a correction. “The fall in bankruptcy filings that took place in the first quarter of this year caused the index to rise an unprecedented amount,” Legrady says. But he also cautioned that “a moderate increase in the number of bankruptcy filings in coming quarters would lead to a slight decrease in the index” in coming months.
Lower bankruptcy filings translate into more people trying to pay delinquent bills rather than to write them off in a bankruptcy proceeding, a positive for collection firms.
The index takes into consideration U.S. unemployment rates, the federal funds rate, the level of the consumer price index, bankruptcy filings, the market capitalization of publicly traded collection and debt buying firms, and credit card charge-off rates.