Credit Clear continues bullish run following ARMA Group acquisition

Credit Clear chief executive officer Andrew Smith says the February results had exceeded expectations.

Melbourne-based receivables management provider Credit Clear (ASX: CCR) has signed 18 new clients in February 2022 following its AMRA acquisition.

The company anticipates around $ 1.5 million in additional revenue over the next 12 months as a result of its new batch of clients.

Moreover, Credit Clear said it plans to capitalize on “significant performance-based and upsell opportunities” generated by the new influx of clients from market niches such as financial technology (fintech), financial services and insurance.

Sorting new business

Credit Clear revealed it was engaged by “one of the largest global fintech providers” to provide services for three separate areas of its receivables management cycle and is expected to apply a myriad of tools including digital and legal across the collections life cycle to resolve accounts, the company said.

Furthermore, Credit Clear struck a deal with an undisclosed automotive manufacturer to provide solutions for early-stage default accounts in Australia and New Zealand, which is to be managed through a “purely digital” collection stream.

Credit Clear has also been engaged to provide first-party digital collections for a “diversified financial service provider’s Buy Now Pay Later (BNPL) product”. Another notable client picked up in February was a third-party claims administrator and government insurer.

Although Credit Clear has remained tight-lipped on the identity of its new batch of clients, the receivables management company said it was the “lead recovery agent” to support a government insurance provider covering “the whole of the NSW government agencies on motor and property claim recoveries ”.

According to Credit Clear’s chief executive officer Andrew Smith, February’s digital results were “very encouraging” and exceeded expectations and showed that corporate Australia is beginning to return to pre-pandemic collection activity levels, following an extended period of restricted activity given by COVID- 19 pandemic. ”

Mr Smith also said that Credit Clear was “well-positioned” to take advantage of current market conditions which included less debt being sold by creditors, a greater focus on the customer experience throughout the entire lifecycle and a greater need to invest in partnerships with organizations who are subject matter experts in the area.

Strong run since ARMA acquisition

Importantly for investors, Credit Clear’s digital payment plans set up by ARMA clients now exceed $ 2 million since being integrated with its digital platform around two weeks ago.

In December 2021, the debt collection company announced a $ 46 million purchase of established Australasian debt collection service company ARMA thereby accelerating Credit Clear’s growth by leveraging its scalable digital billing and communications technology platform across ARMA’s portfolio of more than 400 active clients.

The deal more than doubled Credit Clear’s revenues to $ 26.5 million and its EBITDA to $ 3.9 million.

At the time, Credit Clear’s management said the addition of ARMA’s senior sales force would create new business in the Asia Pacific region and broaden its exposure beyond insurance and commercial to embrace the consumer, education and parking sectors.

“The up and cross-sell opportunities between ARMA and Credit Clear clients are being uncovered and taken up at a rapid rate,” Mr Smith said.

“The overwhelming response from clients to the Groups enhanced offering with a full customer lifecycle solution underpinned by award-winning AI-driven digital capability while being supported by best practice traditional methods is being incredibly well received.”

“The strength of the industry-leading digital technology supported by exceptional traditional service, we believe provides a unique solution to the $ 2.5 billion collection market in Australia,” he added.

Rising monthly payments

In terms of engagement, Credit Clear reported that 2,423 customers set up payment arrangements in February 2022 at an average of $ 850 per plan. In total, the company generated $ 2.8 million in monthly payments – a 38% year-on-year increase. The rate of customer engagement also rose as Credit Clear pushed out around 1.5 million communications and said it was averaging more messages every month than ever before.

“We are at the forefront of change within the sector, which is being driven by a combination of most households dealing with many more monthly expenses to manage and while needing nonintrusive and easy methods to manage their payments to creditors,” said Mr Smith.

“The results are also encouraging given the large number of customers that engage with Credit Clear’s digital platform and the positive experience that is measured through net promoter scores and customer feedback,” he added.

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