The Collection Process

https://www.youtube.com/watch?v=F9e_bvTOEdU
The Collection Process
Why do you want to start a collector? Are you a costs collector? Think of the reasons why you want to start a collector for a minute. I never planned to be a costs collector; I fell into it through a job as a receivables clerk. I found I was actually efficient debt collection and I took pleasure in the work so I kept at it by finding out all I could to be the best. I eventually started my own collector from home and grew my business and ran the firm for 8 years till selling it to write full time.

A collector is a service business that other businesses make use of, or outsource to, any consumers that are not paying on time or not paying at all. They will also use them if they receive bad checks from consumers and don't know the best ways to set about collecting on them. A collector collects your money that you're not obtaining from your consumers. They keep a commission on what they collect and send you the rest.



Most collector work on a contingency or commission basis. I have always liked this arrangement due to the fact that how much money you collect is based on how well you do your job, a win win scenario. You win due to the fact that you become great at your job and it shows in how much money you collect, therefore bringing you more business and more money. Your clients enjoy it due to the fact that you are sending them money they would have otherwise never collected.

If you are thinking of starting your own collector you have to decide if you want to start it from home or from an office, you will need standard office equipment including one or more computers and a printer. You would need to be knowledgeable 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 residence and what you will outsource.

Going back to the Fair Debt Collection Practices Act, this is your policy book and there could also be other laws in your state relating to debt collection that you must 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 must be included in a letter, what time you can and can not call a debtor, what you can and can not say and far more.

When you are starting a collector you have to think of who your consumers might be. Your clients can be any business that extends credit to their consumers or who accept payment by check. Credit card companies, such as department store cards, fuel cards, and others. Any individual who lets a consumer leave their establishment with a product without paying at that moment can make use of a collector.

To construct a consumer base you can make cold calls to the businesses in your area. You can browse the want ads in the newspaper and learn which businesses are trying to find people in their receivables 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" firm locally and you will get recognized across the country and your business will grow.

When you are trying to find out what to charge for your collection services, you have to check out what other firms in your area are charging. Visit their websites, request their details, make sure you know what they offer for the rate, lots of firms offer lots of different types of services and some are included in the commission while some are an added cost. Also remember that the older an account is the more challenging it is to collect, you might consider charging a higher commission rate on older accounts. Remember what your overhead will be each month before you set your rates.