How To Start a Collection Agency & Work on Your Business Plan

Jan 27, 2014

You’re probably wondering, “What actually is a debt collection agency?” Well, a collection agency works by charging a percentage of someone’s money who are behind on their debts. Many businesses in the USA benefit from collection agencies, including hospitals, stores, credit card companies, and even government offices. Starting a debt collection agency and setting up a collection agency merchant account can certainly prove to be a wise choice, both in business and finance. Below are a few tips to start a collection agency successfully whilst working on your business plan.

It probably goes without saying, but the most important step to take before setting up a debt collection agency is to learn about the industry. Do your research, and find out everything you need to know about how it works, plus any federal and state laws that cover how debts should be collected. This is super important and is the first thing you should do. In any business, it’s always wise to check state laws before jumping to a decision. Once you’re clued up, contact state officials to find out how you can start running a collection agency legally, and find out which permits and licenses you will need for this particular business.

When you’ve established any legal issues you need to get past before setting up your business, determine how much in fees you will charge. Usually, collection fees are 25% when the debt is over 6 months old, and fees rise for debt older than this. The next step, and one of the most important, is choosing how to contact the debtors. This can be done by making a personal visit, making phone calls, or sending letters. The most effective method is in person, whereas the least is to send letters. Nevertheless, this is completely down to you, and whichever choice you make will be included in your individual business plan.

Also included in the plan should be which marketing materials you will use to attract potential new customers. Will you set up a detailed website, get flyers made, or would prefer to contact possible customers personally? Just like how you will contact debtors, the method in which you establish relationships with customers is up to you, too. The great thing about owning and running a debt collection agency is that, as long as you adhere to state regulations and have all the necessary licenses and permits, the choice is yours when it comes to your business marketing plan.

Overall, with a debt collection agency, you are totally free to reign. What are you waiting for? Establish a business plan and set one up today.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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