How To Start A Collection Business

Collection agency helps a business or individual to collect money from their due accounts. It is a good time to start debt collection business due to growing consumer debt. A debt collector performs most of his duties on phone or email therefore you can start the business of collection with low start up costs. Low start up costs make debt collection an ideal business for the people looking to start their own career to become financially independent. You can start your business with a personal computer, fax machine, cell phone and a printer. Your start up costs also include payments to some investigation companies to track debtors.

Your collection agency charges 20-30% of what you collect from debtors. If you collect older debts then you can have 50% to 60% commission. You should have experience of debt collection to establish your business successfully. If you don’t have any experience then you can face various complexities in your business. You should have patience and empathy to start this business. There is too much stress in this business therefore it would be good to consult a person who is already involved in this business. The income of your business can vary because it depends on the type of debts you collect.

• You should research laws related to debtor’s rights. You can regulate issues such as time of collection calls, notices and representations according to the laws of the Govt. Awareness with all such laws is necessary before starting collection agency business.
• You should arrange an office with a computer and telephone. There should be desks, chairs, file drawers and business cards. The advertising material should be available to market your business locally.
• You should develop a professional website because your online presence is necessary in this age of technology. You can hire a programmer or writer to help in the process of website development. Optimize your website to get good ranking on popular search engines. You can also market your company by joining local groups and yellow pages to get customers.
• You should start business without any compromise although you have to take loan from banks or Govt. If you are unable to arrange finance from banks then try to get help from your relatives and friends. If you have a plan to start it as a home based business then it would be difficult to get loan from banks.
• You should make a collection plan describing the whole process of debt collection. It can consist of asking for payments, warning letters, telephone calls and certified letters. All the communication should be done within the limits defined by the laws of the Govt.
• You should contact and market your business to the local companies that offer credit services to individuals and businesses. Medical centers, travel agencies, furniture companies and lawyers’ offices are good places to market your collection business.
• Get started because it is necessary to succeed in any business. Make plans but it is better to take action after making a good plan instead of making plans again and again.