Collection House Limited (ASX: CLH) is a receivable management company – in plain English, they are a debt collector operating across the country. Working with some of the largest banks and corporations in Australia, Collection House has recently made it onto my watchlist.
Why I Like The Collection House Shares
The Collection House business model is based on providing an end-to-end service including debt collection, repayment arrangements, and credit management training. However, their main business is the collection of debt in which a commission is taken. By taking the debt off the client’s hands, Collection House ensure a smoother recovery process – this potentially eliminates the risk of debt write off and non-compliance.
Collection House can weather material change in the economic climate. Traditionally, in a struggling economy debt will become cheaper and clients will be more inclined to overleverage themselves and take advantage of the drop in interest rates. This leads to a growing potential pool of customers who require debt consolidation and education services.
Collection House prides itself on its ease and regular payment arrangements, not only is this good for consumers it is also fantastic for investors. These regular payment plans effectively create an annuity type structure within the business ensuring a regular stream of income from an initial purchase of customer debt.
As the business has expanded the reputation has grown significantly; due to the nature of the industry customers are skeptical of new entrants and will automatically gravitate towards industry leaders and companies that have ethical reputations. This is a long-term achievement that puts Collection House in prodigious spot for client acquisition.
Management Experience
Managing Director and CEO Anthony Rivas has been part of Collection House story since 2016, bringing with him over 25 years of global experiences in the collections and receivables business. In my opinion, Anthony is ideally placed to drive the continued success of Collection House not only in Australia but internationally.
Buy, Hold or Sell
In conclusion, Collection House is an industry leader with a proven track record. I have not yet purchased shares but have placed this stock on my watchlist. I will continue to monitor the business with an eye on their diversified business segments.
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Anthony does not own shares in any of the companies mentioned.
