How to Start the Best Collection Agency
One of the biggest reasons why collection agencies get such a bad rap is because of the sheer number of firms that rely on unethical or improper debt collection practices. Which is a shame, because de...
Work at Another Business Collection Agency First
This is a relatively general piece of advice that can be applied to any industry, but that’s because the principle is universal – before you start a company, it is always smart to have actual, first-hand experience from the perspective of an employee or a non-owner, so it helps if you work for another collection agency first. You can work as anything from the executive level to the rank and file debt collector. This will help you gain useful experience and knowledge about how a debt collection firm works.
Aside from getting valuable on the job training, it will also be advantageous if you become a member of professional organizations such as the IAPDA (International Association of Professional Debt Arbitrators), because it will usually assist in debt specialist certification, and there’s the fact that certification itself helps in training you in the principles of ethical and fair debt collection.
Secure the Proper Permits and Licenses
Different countries and different states have specific qualifications when it comes to issuing licenses for debt collection firms. There are even states that do not require any license. So it helps to first research which one applies to the state you are going to practice in, and then to ensure that you will be compliant with state and federal laws. A good starting point will be your country’s government website, as it usually carries guides on how to secure business licenses and permits necessary for any kind of business.
Be Prepared for Legal Issues
Even though the goal is to operate your business collection agency in full compliance with the law, you should still be ready for any potential legal troubles (which can sometimes arise from borrowers who try to throw their way around by taking matters to the court.) So make sure you have a contingency in place in case the company needs to resolve something through the court – if you have the budget for it, you can get a lawyer on retainer or you can look for a firm that can be put on your speed dial.
Lastly, you have to make sure you have a serviceable starting budget. The best collection agency does not really require a huge amount of starting capital, nor will it have huge overhead costs, but you still need some cash in order to start because commissions will not arrive until the payment comes in from the debtors. So set aside a decent sum for your starting operational expenses before jumping in with both feet.
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ABOUT THE AUTHOR
Jag Cruse spent the better part of her twenties working as a debt collector for a couple of different agencies, climbed up the corporate ladder, and is now lending her expertise and valuable experience as a debt collections consultant for the best collection agency.