On February 18 the debt collection agency Collection House announced that it had entered into agreements to sell two subsidiary businesses, National Receivables Corp and Insurance Claims Solutions.With those sales the company completed a process that had started in October 2006, when retired banking executive Tony Aveling agreed to lead a restructure of the company.Collection House had spent the years following its listing on the Australian Securities Exchange in 2000 acquiring a portfolio of businesses that included Insurance Claims Solutions, a claims assessor and handler, the Australian business of Rapid Ratings, a US ratings agency, Australian Business Research, a credit reference company, National Tenancy Database and National Receivables Corp.As the group's portfolio of business grew its performance suffered. There were too many businesses for management to handle and the core business, debt collection, was suffering.Aveling had served on the Collection House board before his retirement, so he knew the business well when he was approached to lead a turnaround. Aveling said: "The previous CEO had made a recommendation to the board that the company get back to its core business and sell all the non-core businesses."When I came on as CEO that decision had already been taken. I agreed that it was the way to go. My job was to implement the turnaround plan."Some of those businesses made money. Insurance Claims Solutions made a little money. Australian Business Research and National Tenancy Database were both good businesses."The trouble with owning those businesses was that they increased risk in the core business. They made it hard for management to keep its eye on the ball. The sale of those companies helped de-risk the core business."Proceeds from the sales have been used to reduce the company's own debt and to buy delinquent debt. Collection House has gone from being a highly geared company, with a debt to equity ratio of 75 per cent at June last year to a ratio of just 47 per cent at December.Aveling said the big change in the debt collection market over the past 10 years has been a move by banks and other lenders to sell their bad debts rather than keep them on balance sheet and contract with collection agencies on a commission basis.This has given birth to the forward flow agreement. A debt collection agency enters into an agreement with a lender to buy its 180-day delinquencies and these are passed across each month.Contracts are usually for 12 months but may be for 18 or 24 months. The standard debt is a 180 delinquency but there has been a recent trend towards 120 days. Aveling said: "One bank has made a sale of 120-day delinquencies recently. I think the market will move to that. Banks don't see collections as a core activity."Aveling said the move from commission-based contracts to debt purchase had changed the dynamics of the industry. The market is very competitive on the commission side where it does not require much capital to get into the business. "Once you get into purchasing