We don’t need to justify the vital role collection agencies play in our economy. They obtain revenue for companies they might not have recouped otherwise systematically and ethically. Agencies also help consumers stay accountable for their financial purchases with manageable repayment plans.
Are you interested in opening a collection agency? The first thing you should do is prepare a realistic start-up budget. Additionally, the resources available to you to set up a compliant shop are numerous. This makes the breaking through the beginning days less complicated and tiresome. Do your research and touch base with vendors that specialize in the account receivables management industry to guarantee the highest chance of success. Not sure where to start? Check out our simple to succeed in running a successful debt collection agency to get the juices flowing.
If there is any industry where experience is a crucial tool to success, it is the collections industry. There is much more to it than calling consumers and collecting on past due monies owed. Working within a debt collection agency – before opening one of your own – is essential. Experience grows your understanding of regulations, as well as best practices and policies. You’ll learn the most effective way to speak with a consumer and what backend office tools are a must-have.
Don’t underestimate the power of experience. You might be gun-ho to open your own business, but understanding an agency’s interworkings goes far to guarantee success.
Knowledge of Compliance and Regulations
Compliance within the ARM industry is not lacking. On top of federal adherence, each state also has differing requirements and rules governing agencies within their jurisdiction. The following acts are paramount to understand inside and out when opening a debt collection agency.
- Fair Debt Collection Practices Act (FDCPA) – Prohibits abusive, unfair, or deceptive practices when collecting past due receivables.
- Health Insurance Portability and Accountability Act (HIPAA) – Provides security provisions and data privacy for patients’ medical information.
- Telephone Consumer Protection Act (TCPA) – Regulates how a collection agency can reach out to a debtor via voice calls, SMS texts, and fax.
- Fair Credit Reporting Act (FCRA) – Promotes consumer information’s accuracy and privacy disclosed by consumer reporting agencies.
Finally, each state has its own statute of limitations regarding the age of the debt you can collect. To learn more about each state’s limitations, please review this article.
Acquire Debt Collection Software
Pick any industry, and we guarantee there is software specific to that business to manage their products and services. The collection industry is no exception to the rule. A robust debt collection software assists in your accounts receivable collection efforts by assessing risks, providing analytics and reporting, tracking agent activity, managing individual debtor details, and even providing accounting processes. In essence, they provide automation where it is needed most. Your options in this arena are numerous – check out our fully integrated partners for an ultimate automated solution from the second you call a debtor to the moment to hit submit on a payment.
Set Up an Effective Communication Plan
Communication is a critical factor in ensuring a steady and stable stream of collection activities. After all, without reaching a consumer successfully, you cannot obtain payment, and revenue will be hard to come by. For this reason, before launching your agency, set up, and establish a communication workflow. The ideal communication plan should be multi-channel based. Customer service is paramount – even in collections! Make sure your training encompasses phone scripts, payment authorization captures, email messages, mailed demand letters, even SMS text. The more you prepare on the front end, the better chance you will reach a consumer amicably and obtain payment sooner.
Obtain a Collection Agency Merchant Account
There are no ifs and or buts about it; the collection industry is considered high-risk when it comes to the world of payment processing. Working closely with a merchant service provider knowledgeable about the industry is paramount to establishing a processing account that fully suits your needs. Since 2010, Payment Savvy has created custom, secure, and scalable payment solutions for agencies across the country. Being able to accept numerous forms of payments via a variety of avenues vastly increases your chances of success. Feel free to give us a call to discuss the perfect payment program for your start-up collections merchant account.
Hopefully, our above tips for creating a successful collection agency will inspire you to learn more about each topic. We congratulate you on choosing to open an account receivable management company and wish you much success from the get-go!