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Why do you want to start a debt collection agency? Are you an expense collector? Consider the reasons why you want to start a debt collection agency for a minute. I never planned to be an expense collector; I fell into it through a job as a balance dues clerk. I found I was truly proficient at debt collection and I delighted in the work so I kept at it by discovering all I could to be the best. I eventually started my own debt collection agency from home and grew my business and ran the company for 8 years up until selling it to write full time.
A debt collection agency is a service business that other businesses utilize, or outsource to, any clients that are not paying on time or not paying at all. They will also use them if they receive bad checks from clients and don't know ways to tackle collecting on them. A debt collection agency collects your money that you're not receiving from your clients. They keep a commission on what they collect and send you the rest.
A lot of debt collection agency work on a contingency or commission basis. I have always liked this arrangement since how much money you collect is based on how well you do your job, a win win circumstance. You win since you become excellent at your job and it shows in how much money you collect, therefore bringing you more business and more money. Your clients like it since you are sending them money they would have otherwise never collected.
If you are considering starting your own debt collection agency you have to decide if you want to start it from home or from an office, you will need fundamental office equipment including one or more computers and a printer. You would need to be educated with the Fair Debt Collection Practices Act, have a business and marketing plan, debt collection software, postage meter and/or letter folders, depending on what you will do in home and what you will outsource.
Going back to the Fair Debt Collection Practices Act, this is your guideline book and there might also be other laws in your state concerning debt collection that you need to follow in addition to the FDCPA. Never pick up the phone or send a collection letter without triple checking everything such as any laws on what need to be included in a letter, what time you can and can not call a debtor, what you can and can not say and a lot more.
When you are starting a debt collection agency you have to consider who your clients might be. Your clients can be any business that extends credit to their clients or who accept payment by check. Credit card companies, such as department store cards, gas cards, and others. Anybody who lets a client leave their shop with a product without paying at that moment can utilize a debt collection agency.
To develop a client base you can make cold calls to the businesses in your area. You can check out the want ads in the newspaper and discover which businesses are searching for people in their balance dues or credit department, this could show a need for your services. Join your local chamber of commerce and/or rotary club, do business locally and become the "go-to" company locally and you will get recognized country wide and your business will grow.
When you are trying to determine what to charge for your collection services, you have to take a look at what other companies in your area are charging. Visit their internet sites, request their info, make certain you know what they offer for the cost, numerous companies offer numerous different types of services and some are included in the commission while some are an extra charge. Also remember that the older an account is the more difficult it is to collect, you might consider charging a higher commission rate on older accounts. Bear in mind what your overhead will be each month before you set your costs.