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 financially. 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 licences 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 regulation 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.
Contact us today to start the application process!