How to start a collection agency successfully is a discussion to help you establish your own small debt management business.
What Is A Collection Agency?
A collection agency is a business model that specializes in collecting money (debts) owed by individuals or businesses. The duty of a collection agent is to help collect money from past due accounts.
How To Start A Collection Agency
How Does A Collection Agency Operate?
Majority of debt collection agencies operate as agents of big and small creditors. They collect debts for a fee or a percentage of total amounts owed.
Here are 7 key tips to help start a collection agency successfully.
How To Start A Collection Agency
1. Familiarize yourself with debt collection laws:
The first rule of success in how to start a collection agency is to educate yourself thoroughly about the business you are planning to start. What does it entail to start a thriving collections agency? You need to know and understand the laws that govern debt collections your country, state and city. You need to research all applicable laws before you start your business.
2. You need to establish an operational base:
It is important that you set up an office from where you will be running your new business. At the minimum you’ll need; a desk, chair, telephone, computer, printer, copier, file drawers, business cards, and advertising materials.
3. Develop a collection plan:
How are you going to collect money owed to your clients? This plan may involve;
a) an initial letter stating the amount owed and requesting for prompt payment
b) follow up telephone calls
c) a certified letter stating an appropriate date by which the debt must be paid otherwise legal action can be contemplated
d) a letter stating that a lawsuit is in the offing for non-payment of money owed to your client
You may want to consult a professional debt management attorney to help develop some of these documents to ensure they comply with Fair Credit Debt Collection Practices Act.
4. Market your debt collection agency:
Think of ways to market your credit management services locally so you may get customers. Marketing can either be a mixture of free advertising and paid for ads. Make use of free classified ads sites on and offline to spread the word. Put ads in local newspapers and magazines classified sections. Make use of fliers. Tell your family, friends, and peers about your business. You need to get the word out.
5. Contact local businesses directly:
This is one of the most important parts on how to start a collection agency. You need to solicit business. The best way is to contact every business in your locality pledging to assist them with their debt collection tasks efficiently and cost effectively. Take this opportunity to distribute your advertising materials to local businesses, individuals, law firms, medical centers, etc.
6. Commence operations:
You need to get started now because you’ve spread the word out and many people would be expecting to get in touch soon. Have a client acquisition contract ready. Make sure all the necessary paperwork is ready for your first client.
7. Take your business online:
You can’t start a collection agency and fail to take it online because customers use the internet to search for products and services before making the buy decision. You need to be online so your current and potential customers can find you easily and fast. These are some tips on how to start a collection agency.