How to Start a Collection Business
A debt collection business can be a lucrative venture, especially in a bad economy when so many people are defaulting on their credit obligations. In order to start a debt collection business you need to become familiar with the laws surrounding the debt collection process, and understand the competition you will be going up against to get business. There is a lot of hard work involved in starting your own debt collection business, but the rewards if it is done right can be well worth it.
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Instructions
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Start Your Own Collection Business
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Decide on a company name and then apply for a business certificate from your local government office. You will need the certificate to hire employees, start a bank account and accept payments in your company name. Debt collection companies process a large number of payments, so you will want to have your business name and bank accounts started immediately.
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Consult with your local government business office on the licensing requirements you may need to satisfy to be a debt collector in your area. Some states, and municipalities, require you to be licensed as a debt collector before you can get started.
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Establish a merchant account with your bank to accept as many forms of credit card payment as possible for your new business. Collections customers may want to use a variety of payment methods, and you should be ready to accept any reliable payment method available.
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Find a location for your business that allows you to accept mail at a physical address that is not your home. Debt collection can become a dangerous business, because some of your customers may resent what you do. To prevent problems for you and your family, it is best to establish a physical business address away from your home.
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Begin contacting local banks, department stores and any other credit-offering entities in your area and offer your services as a debt collection agency. The best way to do this is to use an introduction letter and then call the client to request a personal meeting.
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Tips & Warnings
Gabeler.com suggests considering a debt collection franchise as opposed to starting a debt collection agency on your own. A franchise offers the business backing and advice of a company with years of collections experience that could prove to be useful.
Avoid using your real first and last name when making collection calls to customers.
References
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Comments
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histacey
Feb 24, 2010
This was a great article because the basics of starting a business, as you described in this article, can be applied to a lot of other businesses as well. Thanks!
