Collection agencies and accounts receivable management
Collection agencies recover unpaid consumer and commercial balances for creditors such as hospitals, utilities, lenders, telecom carriers and governments, usually for a share of what they collect. Many also run early-out and self-pay work for hospitals that overlaps with healthcare revenue cycle management.
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ActiveNamed sponsors are buying collection agencies and the small-firm tail is large, but the industry is shrinking and carries real regulatory, litigation and headline risk.
- Fragmentation
- High
- Most firms are very small, even though about half of receipts sit with the largest firms.
- Universe from a public registry
- Low
- There is no national list of agencies, and NMLS only covers states that license collectors through it.
- Recurring revenue
- Medium
- Clients place new accounts every month, but contingency revenue moves with placement volume and recovery rankings.
- Change-of-control friction
- Medium
- Many states require change-of-control filings or approvals and bank clients can exit on a sale, but there is no single regulator approval like an insurance Form A.
- AI operating leverage
- High
- Payroll is a large share of receipts, turnover is high, and most work follows scripts, notices and fixed rules.
Our view. For change-of-control friction, High means harder to close.
Universe
Registry
NMLS Consumer Access. Lists collection agency licensees only for states that license them through NMLS, such as California and Maine. Other states license through their own agencies or do not license at all, and there is no federal list. Census and BLS publish counts by NAICS 561440 but not firm names, and they exclude debt buyers and collection law firms.
Census counted 2,557 collection agency firms in 2022, operating 3,092 establishments with 106,184 employees.
Source: U.S. Census Bureau, Apr 10, 2025
Collection agency establishments fell from 4,525 in 2013 to 2,877 in 2023, and employment fell from 128,150 to 91,811 over the same period.
Source: U.S. Census Bureau; U.S. Census Bureau, May 29, 2025
The CFPB's 2020 debt collection rule treats collection agencies (NAICS 561440), debt buyers (NAICS 522298) and collection law firms (NAICS 541110) as separate categories. The 561440 counts above therefore leave out collection law firms and debt buyers that are not also collection agencies.
Source: Consumer Financial Protection Bureau (Federal Register), Nov 30, 2020
Diligence risks
The CFPB received about 387,400 debt collection complaints in 2025, up from about 207,800 in 2024. The CFPB said credit reporting of unrecognized collection accounts was a principal reason for the increase.
Source: Consumer Financial Protection Bureau, Mar 2026; Consumer Financial Protection Bureau, Nov 2025
WebRecon counted 3,000 FDCPA lawsuits in 2026 through August, up 10.2 percent from the prior year. It said this would be the second straight year of rising FDCPA litigation after a decade of decline.
Source: AccountsRecovery.net (WebRecon litigation and complaint statistics), Oct 5, 2026
No federal agency other than the FTC announced a public FDCPA enforcement action in 2024. The FDCPA still gives consumers a private right of action against any collector that violates it.
Sponsor-owned medical collectors draw advocacy and state scrutiny. In a Washington case over a hospital chain's charity care, two sponsor-owned collectors were ordered to reform their practices and paid about $1.8 million in penalties.
Fragmentation
In 2022, 1,940 of the 2,557 collection agency firms had fewer than 20 employees. The 79 firms with 500 or more employees had 55,379 of the industry's 106,184 employees.
Source: U.S. Census Bureau, Apr 10, 2025
In 2022, the 64 collection agency firms with receipts of $100 million or more took in about half of all industry receipts.
Source: U.S. Census Bureau, Apr 10, 2025
When the CFPB began supervising larger debt collectors in 2012, it said about 175 firms with more than $10 million in consumer collection receipts held over 60 percent of that market's receipts.
Revenue model
Third-party collectors are usually paid a contingency fee, which is a percentage of what they recover. The CFPB said contingency collectors earned a large majority of industry revenue in 2019 and compete for placements mainly on recovery results.
Source: Consumer Financial Protection Bureau (Federal Register), Nov 30, 2020
Revenue recurs at the client level because creditors place new accounts every month, but it is rarely contracted volume. Placements move with charge-off rates and the credit cycle, and creditors often split work across several agencies and shift share toward the best performers.
Our view
Margin data for collection agencies is not published in public sources. Buyers should rebuild margins from client-level fee rates, liquidation rates and cost per account in diligence.
Our view
Change of control
Maryland treats a transfer of 25% or more of a licensed collection agency's ownership as a change of control and requires the licensee to file an update before the change takes place.
Source: Maryland Office of Financial Regulation, Feb 26, 2016
Maine moved debt collector licensing onto NMLS, where a change of control must be approved before it takes effect and changes to direct owners or executive officers need 30 days of notice.
Source: ACA International, Sep 18, 2023; NMLS / Maine Bureau of Consumer Credit Protection, Oct 4, 2023
California licenses debt collectors through NMLS and requires licensees to file amendments within 30 days after a change in the people named in their license application.
Source: California Code of Regulations (via Justia Regulations)
Who is consolidating
No aggregate evidence is shown for this section.
Where AI changes the cost base
Census data for 2022 put collection agency payroll at about a third of industry receipts.
Source: U.S. Census Bureau, Apr 10, 2025
In a CFPB survey conducted in 2015 and published in 2016, agencies reported working 1,000 to 3,000 accounts per collector. Respondents with more than 250 employees reported annual staff turnover of 75 to 100 percent.
Most labor sits in collector calls, inbound payment and dispute handling, call quality review and client reporting. Validation notices, dispute responses, call monitoring and state-by-state rule checks are rule-bound and document-heavy, which suits AI drafting, review and digital self-service.
Our view
Automation does not relax the rules. Call-frequency limits, required disclosures and dispute handling apply whether a person or software contacts the consumer, so the gain is lower cost per account and better quality control rather than more contact.
Our view
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