Adam Parks (00:08)
Hello everybody, Adam Parks here with another episode of Receivables Podcast. Today I’m here with my longtime friend and the current RMAI president, Amber Russo, to share with us some of her experiences about being a small debt buyer and how that’s evolved through the years. Very excited for the discussion today. How are you doing today, Amber?
Amber Russo (00:28)
Good, how are you? Good to see you again.
Adam Parks (00:31)
Always a pleasure. I’m really glad we got a chance to spend some time together up in Washington State at the recent RMAI Executive Summit. But for anyone who has not been as lucky as me to get to know you through the years, could you tell everyone a little about yourself and how you got to the seat you’re in today?
Amber Russo (00:48)
Sure. My name is Amber Russo. I am president of Kino Financial, which is a small, mid-sized debt buyer based in Arizona. I started in this industry working for a collection law firm. In 2014, transitioned into the world of debt buying. And in 2017, I started Kino Financial. So we’re about to have our 10-year anniversary. We started in one state buying auto deficiencies, and we’re now in twelve, buying a diverse set of products and with many relationships in the industry.
Adam Parks (01:25)
Well, it’s given you a great opportunity to expand and grow over time. And I think it’s the perfect guest for this conversation because there was a time when being a small one-state debt buyer was a very feasible business model. There were a lot of different buying opportunities in the market.
Come 2011-2012, obviously things started to change; resale restrictions and other things started to come into play, and deals had to get more creative, or debt buyers had to find these new avenues that they could go down to find product portfolios that make sense for them. Now you said you started single-state and kind of grew from there.
Talk to me a little about what that experience has been like as the marketplace has continued to change and the challenges have become a little bit greater if you’re too small.
Amber Russo (02:13)
I still think that there’s an opportunity for folks with a very small footprint to partner with local banks or local credit unions. When I started Kino Financial, we were buying from a local auto finance company. And so, buying direct from them, really working with just straight charge-off paper.
And then certainly, if I want to get into the space of the credit card market or retail installment loans, you have to partner with folks that are buying nationally who are willing to sort of JV with you and let you peel off some states. Usually that’s not one or two. Or where there are still resale provisions in the contracts. We saw those a lot early on in the debt buying, where you could just sort of retrade different state packages.
I do think that that’s there. It exists. I’m buying some of that. However, you really have to up your game in terms of your qualifications. You have to be prepared to be audited by those original creditors as part of the downstream.
You have to be able to show your RMAI certification. State that you meet all of those standards. Otherwise, the banks will not agree to you being in that retrade position.
Adam Parks (03:39)
So even in a retrade, a lot of times they’re maintaining the right to approve those buyers. And so it’s not like, being downstream, the qualifications are any less. And I agree that there’s a lot of opportunity at the local level. And starting my career in this industry at Credit Max, we were selling on an individual account basis, mostly zip code-based files, so that an attorney could come in and build a portfolio that specifically was going to work for their needs.
And I think that was an interesting approach, but obviously a very different model for a very different time. And so as you’ve gone through that growth, what have been some of the catalysts that have really worked well for you as you’ve expanded into new states and tried to grow your footprint into more regional?
Amber Russo (04:29)
Tell you what, I mean, and I think you and I have both said this before: the relationships are the most important thing in this business. And so I’ve gone where partners of mine have gone. If a law firm says that they’re looking to expand their footprint into two new states, I look for opportunities there if I know that that law firm is already a good partner of mine.
And we sort of take that growth step together. And I think that’s been a good organic model for our growth, right? It’s not like we’re not picking states off of a map with a dart. It really just is like an organic growth with my partners.
Adam Parks (05:12)
Which is an interesting approach. So from a partnership perspective, it sounds like performance might not be the only thing that’s important to you. What are some of those other things in those law firm or agency partnerships where you really find value beyond just the core performance numbers that everybody talks about?
Amber Russo (05:33)
I think it’s important that you’re succeeding and failing together, right? And so if I can look at a potential purchase and before saying to my firms, here’s your plate, eat off of it,
I can say, Can you look at this and tell me, do you foresee any problems? Do we have any? Should I go back and ask for additional media on this particular sample so that you can look at it more closely? I think that having that relationship outside of just performance numbers and showing that we all respect each other’s opinions.
Sometimes I have to say, hey guys, listen, I had to buy this product in Tennessee, despite maybe knowing that we might have some trouble with a particular court, because I bought it in my other state footprints, and sometimes we have to have that conversation, which is like, thanks, Amber. But it’s a true partnership. And I think that that is what makes you successful outside of a traditional service rate scorecard, right?
Adam Parks (06:47)
Well, it’s the relationships? And then it sounds like it’s also some of that ease of doing business with another organization. Some of it is about, like, hey, I’ve known this owner for 25 years. We’ve been working together. We’ve had a lot of success together. But it’s also about how easy they are to work with.
How fluid is the technology? How easy is it for me to be passing files back and forth? How quickly are they responding to client services, requests, or disputes and things of that nature? How complex is that matrix that you’re looking at? And do you think it’s more or less kind of complex than, maybe, larger or similar organizations?
Amber Russo (07:26)
I think larger organizations have a tendency to partner with larger firms or larger agencies, right? So you do end up with the scorecard that drives your market share and things like that. When it’s small to small, I think we have a little bit of that hometown advantage. You learn things that don’t show up on a scorecard.
I’ve got one judge that’s gonna make you fly to Arkansas for a trial; he’s not letting you do a Zoom appearance, so I think you have that hometown advantage and sort of that small business relationship, and I will say, look, I’ve come from the law firm side, so it’s really where my comfort is: we have a heavy legal strategy on the products that we buy. That said, I’ve done a lot of work with agencies too and tried to expand our digital collection strategy, right?
A lot of that is more difficult to have this, hey, what do you think about this, and what’s happening here? It really boils down to: what are your email addresses? How’s your data integrity? Can you get me cleaner information so that I can right party contact your folks? So I do have to do a different sort of work on that product depending on where it’s going.
Adam Parks (08:56)
That’s interesting in what needs to be prepared in order to empower that partner to be able to actually collect, whether it be through a collections channel or a litigation channel, and giving them the tools and the documentation that are necessary for success, I would think would be a pretty big part of that. And as we think about how leveling the playing field in the debt buying space has changed over time.
As someone who started as a small debt buyer and has grown into a more mid-sized one, have you found value in the RMAI certification program in being able to demonstrate that you operate on that level playing field?
Amber Russo (09:37)
I have. And as I mentioned earlier, it comes up in conversation when I’m looking to partner with a seller. They ask; it’s in some of my sales agreements. I think that the certification standards or the certification program is incredibly valuable, not only for our advocacy as an industry, but also for saying, look, I meet these requirements as a debt buyer. I do think that as we progress forward, we’ll start to ask our vendors to become certified as part of that plan as well, right?
I mean, already you see law firms and agencies really embracing the certification program. I think process servers are the natural next. Because the more I can say, we’re all in this again, right? We’re all in the relationship together, but we all have to be in compliance together as well.
Adam Parks (10:37)
I think that’s a fair statement, and holding everybody else accountable to the level at which you are held accountable, I think, makes a lot of sense. For me, the certification program provides that third-party audit capability. And so I think it demonstrates for everybody that we’re holding it to the same standard.
It was also my experience earlier on in the certification program: a lot of smaller creditors, as they were preparing for their first sale, were looking to it as a guideline for the types of due diligence and RFI criteria that they need to be evaluating, reviewing, documenting, etc., as they’re going through that bid process. So I think that certification has earned that level of trust that kind of allows it to be a double-edged sword.
Amber Russo (11:26)
No, I agree. And I think even in the documentation standards, right? You can point to that and say, this is exactly what I need in any sale. I will say, and to your point about the audits, as a small debt buyer, it wasn’t really getting audited very often, right? Particularly before some of the retrades came back, right?
I was just working with smaller local banks or local credit unions. So because of that, there wasn’t a lot of, like, an audit process happening. The certification process helped me. It was like all of a sudden I had a boss watching, checking, are all these things happening right?
And that’s good. I mean, it was good to have that confidence level, right? Or yep, I did that right. Or I could tweak what I’m doing here. So I would recommend to anybody, even if you feel like you’re not big enough, to go through that process. Be part of what helps us qualify debt buyers in our space. In fact, now, in order to be a debt buyer member of RMAI, you do have to obtain your certification within a year of joining.
So I think that because of that change, right? Folks that wanna sort of get into the space say, all right, I’m gonna have to just go ahead and do this right off the bat.
Adam Parks (12:48)
I think it’s important for a lot of creditors. And we’ve been in this industry for a long time, and we’ve learned a lot through our experiences. And I think the certification program is one of those opportunities for newer organizations to get up to speed faster because it’s just such a level of detail in the documentation and the expectations that we have of each other.
That was never really written down before. I mean, like we all kinda knew what we were responsible for and what we were gonna see tomorrow, but we weren’t measuring it the same way. And I think that’s provided a new layer there as well.
Amber Russo (13:25)
Well, I agree. They’re working on 15.0 right now. So the 15th iteration of standards. And I think that the team that works with RMAI on the standards committee and on the certification council, they do a lot of work to make sure that we’re always hitting developments in the industry and making sure that we’re watching those standards.
Adam Parks (13:47)
I think they do a great job of balancing it, right? They’re looking for those standards and what needs to change, but at the same time they’re not changing for the sake of change. They’re changing as things are actually changing in the industry, which is a pitfall that we’ve seen other organizations fall into in the past, even outside of our space.
Amber Russo (14:05)
I’ll give you a good example. I mean, your favorite topic, AI. I think it was proposed maybe two years ago, before it got on, right? Like, at one point it was like, no, we’re not ready.
Adam Parks (14:15)
It was proposed when I was still on the board, and I kind of shot back and said, I don’t know that we’re ready to standardize something we don’t understand.
Amber Russo (14:24)
And I think it’s a good example of how we say, we know this is coming. Let’s prepare for it. Even if it doesn’t make it in today, we’ll come back to it, and I think that’s a good point, right? So AI was proposed back, again, when you were sitting at the board level, and we didn’t put it in; we didn’t let it go through until we felt, all right, no, now it’s time to require some education standards, so I do think it’s important.
Adam Parks (14:52)
But it’s changed a lot, even the availability, right? Like ChatGPT came out when I was president in 2022. So it wasn’t at that same level of agentic AI adoption at that point in time. Now we’re continuing to work down the path. But I think that team is always, well, I know that team, and they’re always watching and continuing to build what I think is the appropriate amount of modernity, right?
We’re not just changing to change and to show, look how much we can change, but more about actively doing these things in a way that benefits all parties involved. Now, as we talk about the certification standards and we think about some of those smaller creditors, I know you’ve worked with some auto finance companies and credit unions and other small creditors.
What have you learned through the process of educating these creditors on debt sales in general and bringing those transactions from an initial discussion or idea to an actual portfolio in your inventory?
Amber Russo (15:54)
I’m laughing only because I picture myself digging through documents at a particular office and like, here, you can look in our filing cabinets. Great. That’s, and yeah, so it’s not like the funnest part of the job.
Adam Parks (16:05)
Yeah, I’ve gotten moving trucks full of FedEx boxes. Like, a long time ago. Yeah.
Amber Russo (16:14)
I will say, that’s sort of an anecdotal response, but it’s really, I think what you end up doing is when you’re having that conversation, you’re like, look. If you’re not ready to sell off the book that you have read, like sitting here because your documentation is poor and you haven’t done a very good job of retention, and things are in Susan’s filing cabinet, and Susan quit five years ago. And then let’s help you prepare for the next round of chart.
Like, you may not be in a position to sell what’s sitting here ready that you’d love to get off your books, but why don’t I help you get ready for what you could potentially sell in six months.
Adam Parks (16:54)
The consulting approach.
Amber Russo (16:57)
The kind of, I think it’s, well, back to that partnership word, right? Like, if we’re gonna be in this together, I can’t come to you with a great offer unless those documents are in order and your records are kept well. And so sending me out to the filing cabinet’s not; I can buy four accounts like that’s not.
And I do, so I think it’s really an education. I mean, you said that, and I think that it really is helping even these local auto finance companies or whatever know, this is what you’ll need later.
Adam Parks (17:36)
I think going upstream is the best thing you can do. There’s no point in building a relationship with the creditor if you’re not going to help them fix what’s happening on the origination side, which increases the value that you’re able to pay for it. As a debt buyer, you can only pay what you can pay for a file, right? You still have to be able to turn some sort of positive cash flow on that investment. And so I think it’s an interesting balance that we start to see.
Amber Russo (18:00)
No, I agree. And we want to bring folks to market for small debt buyers like me. I mean, it may not be like I said; it may never go back to if you’re a one or two-state footprint. I mean, that’s very difficult; you probably have already facilitated those relationships in your state or states. ‘Cause there really is only so much you can do sort of at that smaller level.
Adam Parks (18:26)
Fair. When you’re dealing with the smaller account levels, the challenge for me as a broker, as a buyer, was that the volume of accounts never offset the amount of work that had to go into it unless you were building a llonger-termsolution and I was going to be the solution for the next ten years, right?
We’re gonna buy all these accounts going out for the next decade, which is not a forward flow that anybody’s signing, but those relationships, I think, drive where those go. And the smaller the organization, the more personal the relationship needs to be in order to find a successful partnership.
Amber Russo (19:00)
Yeah, or understanding that even if the volume’s low, you’re willing to expand your footprint and buy the twelve accounts they have in another state. But I think that it’s about partnerships and the growth for both of you.
Adam Parks (19:18)
Well, let’s go back to the partnerships for a minute. You’re a smaller organization; you’re probably larger in some of the firms you’re placing with, you’re smaller in others. How do you maintain that type of control over the accounts, keep things interesting, and build those relationships when you are either a large fish in the small pond or a small fish in the very large pond? How does the strategy change for you?
Amber Russo (19:47)
So, I mean, look, in any situation, because it’s me and I’m boots on the ground, I mean, I will show up at your door if we need to have a really important conversation. You have to be flexible in that way, right? It’s a partnership. And if I’ve said that to you in the beginning, then you should expect that I will show up at the door.
But I think for my larger firms. It’s tough because I recognize that I’m not, I’m not their substantial client. I’m not the one paying the bills. But I think that what I realized through those partnerships is that a lot of those firms or agencies say, look, we want a diverse account base. Like we want to have small debt buyers in our inventory; you guys don’t cause me too much grief.
Sometimes I like to say there’s a machine happening over at those large law firms or large agencies. And it’s fine to say I’m gonna plug myself into that machine. Throw my small inventory in with what’s running through your factory. So I think that’s what that looks like with the larger firms. And, from time to time, you have to say, look, I get it.
You’re so busy, but can you make time for me? And you have to be willing to say, you don’t have time to meet with me for lunch at an NCBA conference because you’re meeting with your biggest client. Understood. Let’s set something up for the following week. And you have to be willing to recognize that. For my small firms, we’ll spend two days together.
What does the strategy look like? What are we doing together? How can we fix this problem? And when they say something like, I just can’t find a great legal assistant to prepare your affidavit packages. Well, then it’s really easy to say, Great, I’ll do that on my end. I’ll hire somebody. I’ll get those prepared for you before I send them. So it’s really about understanding, like, where are the gaps, and how can I help?
Adam Parks (22:00)
I like that. Where are the shortcomings, and how can we close the distance on the gap? I would think even as a small organization within even a larger firm, it might give you some opportunities to be a first mover, right? You get to be that group because you’ve got a little bit more flexibility. You’re the decision maker. It doesn’t have to run through a board and seven committees and 45 discussions. Like, you can just kind of make a decision. Do we want to do this or not?
Amber Russo (22:31)
Well, I have a particular law firm that likes to say to its staff, like, don’t try and fool Amber. Like she knows. Like, the courts are behind. Like, I can pull up; I know how to do a record search. And I think that that’s it too, right? Like, true partnerships are not about, like, don’t try and back, don’t try and soft pedal your way through, whatever. Just beyond, tell me what’s happening. You forgot to send, yeah.
Adam Parks (22:59)
Tell me when you’re wrong. Tell me this was not done on time. I’m sorry. Here’s what I’m doing to solve the problem. I would prefer that response as well. But that’s just me. A little bit of my crazy in there.
Amber Russo (23:10)
Yeah. I just think maybe that’s the lesson for the audience: just be transparent because somebody’s gonna find it.
Adam Parks (23:20)
Yeah. So one of the things that we always talk about when we talk about the different sizes of debt buyers is financing and how different organizations are ultimately funding their purchases. We’ve got that, call it those smaller groups that are friends and family. You’ve got others that are using specialty finance vehicles. You’ve got others that are still doing syndicated bank lines or unsyndicated bank.
So there are a couple of different options. As an organization that started small and self-funded, do you find that gives you a competitive advantage in working with creditors because you don’t have that secondary opinion or approval necessary in order for you to execute on a deal that is a good fit for you?
Amber Russo (24:04)
I do. And it’s certain I do lead; I am forward with that, right? Like, look, I can close quickly because I don’t have to talk to many people. And I do think that that’s helpful. I also think that it’s allowed me to be able to pass on things too, right? Like if I know that there’s only a certain number I’m going to spend this month, it really helps me make decisions. I think, perhaps I’ll risk this one and buy this deal that I don’t love. Why? Because again, it’s our money. And we only, we only have a certain amount of it.
Adam Parks (24:47)
But on the flip side, you’ve got larger organizations that find themselves with deployment targets, and now they’re making purchase or investment decisions, not necessarily based on the best interest of that transaction or that deal opportunity, but based on their need to deploy capital in order to keep their capital available.
Amber Russo (25:06)
Well, sure. Or, what if a certain portfolio takes you longer to get to your servicers because you’re packaging it up real, you’re making sure that it’s going to perform the way it needs to, or there’s some data sanitization that you want to do prior to putting it out. Well, I can afford that delay, not a super long one, but I don’t have to pay; I’m not trying to pay anybody back right away.
So I do think that there are benefits to self-funding. It will keep us a certain size. But if we can support our families this way and we’re marginally successful, I think that I’m happy to stay in this lane of size and scope.
Adam Parks (25:54)
It seems very intentional, right? You don’t want to find yourself chasing the investments. It’s not like you and your team could not find other capital. That’s not the issue. The issue is a specific purchase decision to give yourself flexibility and to give yourself more control over not only the portfolios, but the timing of liquidation, because now you only have one master to answer to, right? Like internally, which is always my preference as well. I can definitely respect that.
As a leader in the industry and as someone who has grown up here and found opportunities of your own as you’ve staked your own claim in the space, what advice do you have for others that are at the beginning of their career and are now starting to look at doing something on their own or expanding out? What advice do you have for others who were in your shoes 10 years ago?
Amber Russo (26:49)
Well, I think that the community is our biggest asset, right? So the other leaders in the space, the other folks that have been there. I mean, you and I would be happy to talk with anybody that’s trying to come up in the space or kind of make their way. I’ve heard before; I’ve heard from folks like, look, like some of these guys, like they’ve got their tight-knit circle. It’s hard to break into.
And all I can tell folks coming in is, raise your hand. Like, let us know that you’re interested because unless I know, I can’t grab you and help you understand this is the next thing you do. Somebody emailed me the other day and said, How do you find your deals? I’m not; there’s no secret here. I’ll introduce you to some brokers. I’ll help you. It really comes down to your shop, your financing, and kind of the risk you’re willing to take. I don’t know if, at my age, I’d say, well, this is what I’m gonna start doing tomorrow, right? It takes a lot of history to get here. But I think it would be fine to say, look, I’m interested in doing these things. How can you help me do that?
Adam Parks (28:07)
I think that’s a great way to look at it. I think it’s a great way to look at it. There are a lot of people that are coming up, and if you don’t raise your hand, we don’t know who to reach out to because there are a lot of people that are happy in the role that they’re in, and they’re not looking to expand or grow.
So if you do have that internal desire, I think there’s no better way than to raise your hand and volunteer. But if you are gonna volunteer, as I said entirely too many times at Summit this year, if you’re going to volunteer, you gotta show up on time and actively participate. Don’t put your name on things and then not participate. It is so mission-critical. And that is the kind of stuff that gets noticed. Right. When you’re there.
But it’s also a really easy way to make some new friends, build some new relationships, and put yourself in a position of personal growth within the space.
Amber Russo (28:59)
I mean, you look at the folks that mentored us and got us to shows, or what I mean, those folks are starting to retire, and we’re not the young crowd anymore. Sad for us. But that means that there’s a whole new generation of leadership; if they want to get involved, there are opportunities for that for sure.
Adam Parks (29:23)
Well, Amber, I think that is a strong message for our listeners today. I really do appreciate you coming on, sharing all of your insights, spending a little bit more time with me. It was great to see you at the RMAI Executive Summit, and I’m really excited for your presidency and all of the things that you’ve been cooking up and trying to push forward. Heavy is the head that wears the crown, and I think you’re doing a great job.
Amber Russo (29:47)
Thank you very much. Thank you for having me. I appreciate our conversation.
Adam Parks (29:52)
Absolutely. For those of you watching, if you have additional questions you’d like to ask Amber or me, you can leave those in the comments on LinkedIn and YouTube. We’ll be responding to those. Or if you have additional topics you’d like to see us discuss, you can leave those in the comments below as well. Willing to bet I can get Amber back here at least one more time to help me continue to create great content for a great industry. But until next time, Amber, thank you so much. I really appreciate all of your time.
Amber Russo (30:15)
Thank you.
Adam Parks (30:16)
And thank you, everybody, for watching. We’ll see y’all again soon. Bye everyone.
