The market for debt collection agencies - France (2023)

1.2 Global market

Sales in the global collection agency market are expected to reach **.* billion US dollars in **** , and to grow at a compound annual growth rate (***) of *.*% over the period ****-****.

Projected collection agency sales World, ****-****, in billions of US dollars Source: ****

Theactivity of collection agencies in a given region depends on a number of economic factors, such as interest rates, household disposable income, the number of loans granted and the rate of GDP growth.

On average worldwide, a collection agency recovers *-**% of the total debt it has managed to collect. Companies and banks call on a collection agency when their customer is still in arrears after a period of * to * months. [***]

By ****, North America alone will account for **% of the global market , followed by Europe, East Asia, South Asia, Latin America, Africa and the Middle East. However, East Asia is expected to grow fastest over the period studied, with a CAGR of *.*% , compared with *.*% for the United States.

In terms of segmentation by application, the financial sector uses the service the most, accounting for **% of applications, followed by healthcare (***).

Breakdown of collection agency activity by application World, ****, in Source: ****

1.3 Domestic market

In France, companies operating as collection agencies are registered under NAF code ****Z.

Between **** and ****, collection agencies saw strong growth in sales, from ***.** million euros to ***.** million euros, an increase of **%. However, the period ****-**** corresponds to a period of decline for this activity, with sales dropping to ***.** million euros in ****. Since ****, the sector has been growing again. Sales in ****, at ***.** million euros, remain lower than in ****.

evolution of the collection agency sales index France, ****-****, index base *** in **** Source: ****

According to the Fédération Nationale de l'Information d'Entreprise, de la Gestion des Créances et de l'Enquête civile(***), France accounts for ** billion euros in losses from unpaid receivables annually, and this endangers the work of ***,*** employees. What's more, a quarter of all business failures are linked to late or non-payment.

2.1 Increase in corporate loans

Changes in the number of inter-company loans and the profiles of borrowing companies give an idea of the companies that could potentially find themselves in a situation of non-payment. So, as the number of business loans increases, so does the likelihood of collection agencies being called in.

A total of *,***.* billion euros in credit was granted in September **** (***). This shows that the value of loans granted by companies has increased over this period.

The graph below shows the evolution of loans made by businesses (***). We can see thatsmaller companies borrow more than twice as much as larger ones. This is probably due to the greater number of SMEs than large companies. We can also see that for all company sizes, the amount of credit outstanding will increase between September **** and September ****: by +**% for SMEs, +**% for ETIs and +**% for GEs.

Outstanding loans by company France, ****-****, in billions of euros Source: ****

We can also look at the sector of companies that borrow money.

The real estate sector accounts for almost half of outstanding loans (***).

Breakdown of outstandings by business activity France, September ****, in billions of euros and as a percentage Source: ****

The accommodation and catering sector is the only one to reduce ...

2.2 Record business start-ups, but with a slowdown in sight

Changes in the number of companies reflect changes in the activity of collection agencies. Indeed, as we saw in *.*, the more companies there are, the more likely they are to have recourse to a collection agency, and the more likely they are to have to deal with customers in debt themselves.

growth in annual number of new businesses France, ****-****, in thousands of companies Source: ****

In ****, the number of business start-ups in France will reach a new record with *,***,*** creations. However, we can observe a slowdown, as the growth rate over ****/**** is only *% compared to a growth rate of **% over the year ****/****. In ** years, the annual number of businesses created has risen from ***,*** in **** to *,***,*** in ****, an increase of almost **%.

In terms of business sectors, specialized, scientific and technical activities contributed the most to these creations, with **.*% of companies, followed by trade, car and motorcycle repairs with **% of companies, and construction with *% of creations.

The seven sectors that contributed most to business start-ups France, ****, as % of total Source: ****

Finally, we are interested in the regional distribution of these business creations, as this is an indicator of the location of potential customers or creditors for collection agencies.

Overseas France and Corsica have ...

2.3 Shorter payment terms for SMEs than for large companies

In ****, average supplier payment times will be ** days of purchases (***). Overall, payment times have been falling since the early ****s. In ****, supplier payment times stood at ** days of purchases, and customer payment times at ** days of sales, a reduction of ** days of purchases and * days of sales respectively between **** and ****.

The French law on the modernization of the economy (***), which capped payment terms at ** days, has strongly encouraged this reduction in payments. Nevertheless, large companies, which are less numerous than SMEs and ETIs, are experiencing an increase in their payment times, as shown in the graph below:

customer and supplier payment terms by company size France, ****-****, customer payment terms in days of sales and supplier payment terms in days of purchases Source: ****

We now turn our attention to major payment delays (***) in ****:

Late payments by company size France, ****,

SMEs are the most penalized by late payments, costing them ** billion euros in ****. They will therefore be the most likely to use collection agencies. For SMEs, late payments cost * billion euros. For GEs, on the other hand, a reduction in late payments would have a negative impact of ** billion euros on their cash flow.

Finally, the business sectors most affected by late ...

2.4 Household overindebtedness mainly affects women and low-income earners

Households may also be in arrears or unpaid and be contacted by collection agencies. The sources of unpaid debts can be multiple: repayment of a loan (***), etc.

We are going to draw up a profile of households filing for overindebtedness in France in ****. In fact, these are the same households that have received reminders from debt collection agencies.

Over-indebtedness files are submitted to the government when a person is no longer able to pay their debts. If the application is accepted, the commission may decide to :

total cancellation of personal debt without judicial liquidation total cancellation of personal debt with judicial liquidation if the person has assets to sell partial cancellation of personal debt a personalized payment plan to help the person repay his or her debts

In ****, ***,*** overindebtedness cases were filed. This figure is down since ****, when ***,*** cases were filed. The overall debt of overindebted households represented *.* billion euros in ****. This figure is also down since **** when it represented *.** billion euros[***]

This debt is broken down into financial debt (***) in ****. The proportion of current-charge debt has increased by * percentage points in two years, while financial debt has fallen by * percentage points over the same period.

With a finer breakdown, financial ...

3.1 Value chain

Collection agencies generally start the procedure with an amicable phase, which consists of reminding the debtor of his unpaid debt and then, if there is no response, sending a formal notice followed by reminders. After a certain period of time, which depends on the collection agency, and in the absence of payment, two outcomes are possible: in most cases, legal proceedings are launched to "force" collection (***). [***] The latter case may arise, for example, when the debtor is a company that has gone bankrupt.

3.2 Collection agencies in France

The number of collection agencies has fallen in ten years, from *** in **** to *** in ****.

number of collection agencies France, ****-****, in units Source: ****

Yet the number of employees in this sector has been rising steadily since ****, from *,*** employees that year to *,*** employees in ****. We will see later (***) that this is due to the diversification of this sector: companies engaged in collection activities may have other main activities and therefore be registered under a different NAF code.

change in number of employees in collection agencies France, ****-****, in units Source: ****

We now turn to the regional distribution of these companies in mainland France in ****.

Ile-de-France is home to the largest number of companies in this sector, with ** agencies, followed by Auvergne-Rhône-Alpes with ** agencies and Occitanie (***).

Region Number of companies Ile-de-France ** Auvergne-Rhône-Aples ** Bourgone Franche Comté * Bretagne * Eastern France ** Center Val de Loire ** Corsica * Haut-de-France ** Normandy * Nouvelle-Aquitaine ** Occitanie ** Pays de la Loire ** Provence Alpes Côte d'Azur **

3.3 Competition between the profession and judicial commissioners

As of January *, ****, bailiffs are to be referred to as "commissaires de justice". Commissaires de justice are public and ministerial officers whose profession is managed by La Chambre nationale des commissaires de justice. [***]

Commissaires de justice are thus empowered by the State to collect debts. In this case, the title under which the commissaire de justice acts must be clear. Indeed, this public official is also empowered to issue and enforce the collection title provided for in the event of non-payment of a check.

The Macron law (***) gives a monopoly to commissaires de justice on the collection of small claims under *,*** euros and with a simplified procedure by electronic means. Since January *, ****, the amount must not exceed *,*** euros. [***]

Nevertheless, as judicial officers' activities are highly diversified, amicable debt collection in competition with debt collection companies accounted for only **% of the activity of the *,*** authorized judicial officers in ****.[***]

4.1 The offer from the two market leaders

iQera

iQera is a French company, leader in debt collection in France. The company handles ** million cases a year. With sales of *** million euros in **** (***), iQera is also positioned to buy bad debts from banks, trying to recover more than is owed in order to make a profit...[***]

iQera is the result of the merger, in ****, between MSC (***) . Today, iQera recruits *,*** people in ** different locations worldwide. Since the merger, the company has been using artificial intelligence at the time of calls to extract data over time and improve customer relations.

iQera is diversifying across the whole spectrum of customer financial relations , and is also taking action upstream of late payments. The services offered by iQera include

Customer relationship management to avoid dissatisfaction leading to non-payment. Healthy outstandings: management of active customer outstandings, customer knowledge to ensure customer satisfaction, and appropriate management in the event of late payment. But also to prevent active customers from falling into arrears. Follow-up solutions with a suitable approach before going to litigation, to maintain customer relations. Amicable collection in your own name or by a bailiff Judicial collection using artificial intelligence to find the best strategy according to the customer's profile. Debt purchase and management.\ ...

4.2 New entrants

We're going to talk here about French companies that have only recently been established (***).

Rubypayeur

Rubypayeur was created in ****, born out of the founder's bad personal experience with traditional debt firms. [***] RubyPayeur then moves on to a legal collection phase if the amicable phase has not worked within ** days. RubyPayeur has teamed up with Legalife, a legaltech specializing in online legal document creation, to speed up collection procedures.

Collection costs are also fixed:

Amicable phase fee: **% for success, *% for subscribers with a monthly subscription fee of €**/month. Judicial phase rate: €*** for the procedure, €*** for subscribers.

RubyPayeur's website also refers to the principle of rating companies according to their payment delays and non-payments.

Good Payeur

Founded in **** under the name Badpayeur, the platform similarly specializes in scoring companies based on their good payment behavior. Goodpayeur sells a report on a company for €*, but also offers subscriptions: €** / month to benefit from * reports per month or €** / month for unlimited access. This enables companies to act upstream of non-payment by choosing the right suppliers. ** million structures are listed. [***]

In the collections segment, the company has recorded a **% success rate and a **% reduction in payment delays. GoodPayeur offers a token-based payment system (***)[***]:

Dunning tool: * tokens SMS ...

4.3 Company diversification

Numerous companies involved in accounts receivable management have expanded their activities to include collections. The table below gives a non-exhaustive overview of these companies and their main activities, focusing on French groups:

5.1 Legal framework for the collection agency profession

General framework

Collection companies must be declared to the Public Prosecutor. A specific bank account must be set up to receive funds collected by debtors. The debtor may choose to pay the amount owed directly to the creditor company, or to the collection agency, which is then responsible for reimbursing the creditor company. [***]

As collection agencies are usually remunerated on the basis of a percentage of the sum recovered, the law regulates their practices to avoid any abuse. According to articles L***-*, R***-* and R***-* of the Code des procédures civiles d'exécution[***], a collection agency :

Must start any procedure with an initial reminder letter. Is not allowed to charge the debtor for any operating costs (***), and is liable to * years' imprisonment and a fine of ***,*** euros. Does not have the right to come to your home and/or make abusive calls. Calling hours are limited to between * a.m. and * p.m. on weekdays, between * a.m. and * p.m. on Saturdays, and are prohibited on Sundays and public holidays. Cannot divulge personal information about the debtor. Have no legal powers (***)

5.2 The evolution of French law on unpaid bills

France's tougher laws on corporate overdue debts are helping collection agencies to grow their business. Over the past few decades, the following major changes have been made:

Law on the modernization of the economy (***), which caps the maximum payment term that can be agreed between the two parties at ** days from the date of invoicing.

The decree of October *, **** introduces a flat-rate surcharge of ** euros for late payment by professionals.

The Sapin II law (***). In addition, repeated non-payments must be reported to the Ministry of the Economy, and administrative fines are made public.

6.1 Player segmentation

• sefairepayer.com
• Aston iTF
• Recouvr'UP - Direct Recouvrement
• RubyPayeur (Atradius Collections)
• GoodPayeur - Direct recouvrement
• Legalife Unltach
• Gcollect
• Cabinet Arc
• Experian
• AGIR Recouvrement
• Intrum
• iQera
• BNP Paribas Factor
• BPCE Factor
• Crédit Mutuel Factor
• Allianz Trade
• Atradius
• Coface
• Concilian (Société Générale)