Starting a collection agency – the marketing plan

As with every business your collection agency needs a marketing plan in order for you to gain clients and grow your business.  If you cannot write your own marketing plan, hire someone to do it for you.  I have written many marketing plans for collection agencies, and have a couple of examples in my book Starting a Collection Agency and also have a few other specific and general marketing plans available for you.

One is a marketing plan for a medical collection agency – this is an actual marketing plan I wrote for a collection agency – you can use the format and change any of the line items that you like so that it fits your agency.

I also have a more generic marketing plan available that you can use or just use for the format and add your own information or change things to fit your agency or geographical area.

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Starting a collection agency – the business plan

If you do not already have a business plan, now is the time to start working on it.  If you don’t think you can write a business plan yourself, hire someone to do it for you.

Business plans specific to collection agencies are available in my book Starting a Collection Agency .


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Starting a collection agency – business cards, logo, website & more

Now that you have a name for your collection agency and a mailing address and bank accounts, you are ready to have your business cards, letterhead and any other marketing materials you want printed up.

Include your collection agency name, your tag line, contact information and if you have room and specialize in a specific type of debt collections that your agency name or tag line does not get across to people, you may want to include that.  For example:  Specializing in student loan debt.

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Starting a collection agency – merchant accounts, bank accounts & PO boxes

Now that you have a registered name for your new collection agency you need to set up a PO box for a business mailing address.  Once you do this, you can open your bank accounts, checking and a trust account at your bank and while you are there, ask them about a merchant account.

There are also many other companies that offer merchant accounts if you do not get one through your bank.  Check out my group called Starting a Collection Agency on LinkedIn for some great discussions and recommendations on merchant accounts specifically for collection agencies.

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Starting a collection agency – choosing a name

As you start the process of starting your own debt collection agency you have to come up with a name and then register that with the state where your offices will be located.

You have already made a list of other debt collection agencies similar to yours that you found online and that are locally established around you, so try not to use words that have already been used in those agencies names.  You want your name to stand out but be professional and let people know what you do.

Some suggestions of good words to use in your agency name could include:









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Starting a collection agency research

I have been doing so much consulting with folks who are starting their own collection agencies that I wanted to start sharing some of the questions and topics we talk about here on my blog.  I figure if one person is asking me these questions, there are at least ten others out there who may have the same questions!

This will be ongoing here on my blog, please leave your comments or any questions in the comments below!

For our first research question about starting a collection agency, I am often asked how do I find out what other debt collection agencies offer for services and what they charge?

Your first step should be to start researching collection agencies online and in your geographical area and determine what services they are offering and what they charge for those services, what is extra and what is not.  Make a list of those agencies along with the % they charge for a commission on collections.  List any other services they might offer and if there is an additional fee for those services, or if they are included in the commission.

For example, some additional services that may or may not be included in their fees could be:

Credit reporting

Accounts Receivable outsourcing

Letter services

Skip tracing

Posted in Accounts Receivable Outsourcing, Ask Michelle, Books, collection agencies, Credit Reporting, Education, FAQ's, Industry Trade Publications, Social Networks, Starting a Collection Agency, The Life of a Bill Collector, Training, Working at a Collection Agency, Working from Home | Tagged , , , , , | Leave a comment

Consumer Financial Protection Bureau field guidelines for debt collectors

The Consumer Financial Protection Bureau published a rule that allows them to supervise any larger consumer debt collectors at a federal level.  I thought their field guide that the CFPB examiners will use to determine this might be helpful to you:

Debt Collection by the numbers:

30 million – approximate amount of American consumers currently placed in debt collection

$1,500 – average amount each consumer owes

4,500 – approximate number of debt collection firms in the US

$12.2 billion –  approximate amount of the debt collection industry‘s annual receipts

63% – percentage of the debt collection industry‘s annual receipts generated by the larger firms that will be subject to the CFPB supervision.

Posted in Complaints, Compliance, Credit Crisis, Credit Crunch, Debt Collection in the News, Education, Fair Debt Collection Practices Act, FAQ's, Getting Paid - Michelle Dunn - Business Finance Columni, Honesty & Integrity, Laws, Legislation, The Life of a Bill Collector, Training | Tagged , , , , , , , | Leave a comment

Leaving a debt collection message on voicemail

As the CFPB makes changes to the debt collection laws that collectors must follow, what are your procedures and policies on leaving a message on an answering machine or voice mail about a debt?

Do you leave a message?  If you do, is it vague or do you go into details?

Telephone Collection Call Scripts & how to respond to Excuses

Posted in Being a Great Collector, Business Credit, Collection Calls, Dealing with debt collectors, Education, Excuses, FAQ's, Getting Paid - Michelle Dunn - Business Finance Columni, Industry Trade Publications, Laws, Legislation, Scripts, Telephone Collection Tactics, The Life of a Bill Collector, Training | Tagged , , , , , , , | Leave a comment

Getting paid offering payment plans and settlement options

Many business owners are now becoming much more open to the idea of offering a discount or a settlement amount to get paid, as well as setting up payment arrangements that allow the customer to pay off a past due balance while remaining a customer.  If you own a business and have a business customer that owes you money, there are some ways you can work with them to get paid instead of having another bad debt write off.

One way to work with a past due account is to really take a look at their account, look at their order and payment history, and decide if this is a customer that has fallen upon hard times or someone who may be trying to avoid making payment.  Once you have determined which kind of customer you are working with you can decide on ways to make it easier for them to pay you.  One way may be to offer a settlement amount.  Settlements work well if you know the customer has some additional money to be able to put towards an account, if it is getting close to the end of the year and they really want to get the debt off their books, or if you can break the settlement payment up into 2 or 3 payments maximum.

To offer a settlement to a customer you will need to decide what that settlement amount will be; will you deduct 10%, 15% or more?  What date do you have to receive this payment in your office by in order for this settlement offer to apply?  What is the cutoff date for the settlement offer?  You never want to offer a settlement without having a deadline, and then stick to it, do not extend it.  Most settlements are made in full – always try to get the settlement payment in full by a specific date, if payment is not made by that date, the offer is off the table and the full balance is due.  Another option depending on the customer and the balance due and how old the balance due may be, is to offer a settlement amount and break it up into 2 payments or 3 payments tops.  Never offer any more than that.  Settlements are meant to get something paid, the balance written off and the account cleared, do not let it drag on like a payment plan.  I have examples of settlement letters and settlement confirmation letters in my books that I have used with great success.

Another option if a customer cannot make a settlement or you do not want to offer a settlement is to establish realistic payment arrangements on the balance due.  You may want to set up a plan where you get paid twice a month rather than a monthly payment, because as you set up payment plans you have to remember that you want to get as much as you can as quickly as you can.  When a customer has to cut a check to you twice a month it not only lowers their balance quicker it keeps you on their mind more often.  If this is a customer you may want to continue doing business with, once you set up the payment plan on the balance due and send your confirmation letter, if they want to place additional orders you can set those up as COD so you get paid for any new orders, they can keep receiving inventory so that they can keep making money and be able to pay you.  Another thing that has worked for me is to add $100 to the COD ticket so that they are paying for the order they receive and also paying you $100 additional towards the balance due.

Another option is to ask for a credit card or automatic check payments spanning the length of the payment plan, this way you can charge the card or issue a check payment on a specific date during the month.  You will need written authorization for this and you can also find that form in my book of letters and forms.

As you decide what types of options to extend to your customers remember that the reason you offer settlements or payment plans is to improve your cash flow while helping your customers.  You want to be able to give your customer options when they cannot pay in full, the more options you can offer the better your chances of getting that payment.  When you are able to work with your customers to get a balance paid you will increase profits and revenues, retain customers, improve your efficiency, increase your bottom line, minimize your risk, have less bad debt and be able to efficiently handle and control your A/R.  Any time you are trying to get paid, you must look at it as a customer service that you are doing and you need to create a win-win situation in order to be successful.

Posted in Ask Michelle, Being a Great Collector, Business Credit, Collections for Creditors, Education, FAQ's, Getting Paid - Michelle Dunn - Business Finance Columni, Helping Debtors, Know your Debtors, Payment Plans, The Life of a Bill Collector, Training | Tagged , , , , , , , , , , , , , , | Leave a comment

3 things your sales people should be doing that will help you get paid

Anyone who has worked in credit and debt collections for any time knows about the troubled relationship between sales and the credit department.  When sales people get paid a commission, they want to make the biggest sale, when they get paid after the customer pays, they pay a little more attention and probably already do these three things!

The first thing the sales department has to do is make sure to get complete paperwork and credit applications for the credit department so that they know the customers credit worthiness BEFORE trying to sell them anything.

The next step is to be aware of the customers credit limits and not to oversell.  When they oversell, the customer is put in a bind, struggles to make the payments, sometimes cannot make the payments and then the credit department has to step in, further tainting the relationship.  This can all be avoided by the sales department knowing their limits and not over selling to people.

The last step for a sales person who does oversell and ends up with a customer who is struggling to pay is to go back to the customer and try to work with them to get the balance paid.  This step can be avoided when the sales department works with the credit department.  I have done this in the past and the sales department does not like being a part of the collection process and once you ask them to do this once, and they see what a struggle it is and that they could have avoided this, you can stop this from happening again moving forward.

Another thing that has worked very well for me as a credit manager at an oil company, was getting policies put into place where the sales department did not get paid their commission until the invoice was paid.  Since a sale is not a sale until the bill is paid, this works well for everyone, except the sales department who wants to get paid regardless of whether the invoice was paid or not.

When the sales department and the credit department work together it creates a win-win situation for both departments as well as the customer.  The customer should be the focus, you want to provide a service, you don’t want to over extend your customer, because this puts a strain on the customer, the business and the customer/sales relationship.  The sales department needs to realize they will not make a commission on a sale that is not complete.  The sale is complete when the order is paid for – if the order is not paid for or is paid late, the company starts losing money, and hits a sour note with the customer.  Work with your customers, create good customer service, and work together within departments at your business for a successful sale, and a successful business.

Posted in Ask Michelle, Business Credit, Checking credit, Collections for Creditors, Customer Service, FAQ's, Getting Paid - Michelle Dunn - Business Finance Columni, Helping Debtors, Know your Debtors | Tagged , , , , , , , , | Leave a comment