If you have decided to start your own collection agency, there are a few things that you must do prior to opening your doors for business. To begin, make sure you have all your business licenses and permits in order. This includes state collection licensing fees and your collections surety bond. This is the most important step in starting a collection agency. You must be licensed by the state to be a collection agent. Each state has different requirements for getting a license. Make sure you have met all the requirements before you apply for the license.
Once you are licensed, familiarize yourself with any and all laws pertaining to the collection business. Make sure you know and understand all of the rules of the Fair Debt Collection Act. This Act is a set of guidelines that you must follow in your collection business.
You will need to invest in some collection software. This software will help you keep track of the accounts from which you are collecting. The software will have ways to track contact information, payments made or course of actions taken. It is very important that you use this software. Financial dealings must always be well-documented for the benefit of your company, your client and the person paying the debt.
Next you will need to start searching for clients. Clients can be found in a variety of places. Any merchant that accepts checks may need someone to collect on non-sufficient funds (NSF) checks. Leasing companies, rental companies and direct sale manufacturers all need assistance in collecting bad debt. Local merchants often need assistance collecting on local debts. The list is endless and the opportunities are large.
Finally, set up a routine for yourself on how to handle each debt collection call. Start by reviewing the debt and knowing all the details associated with the debt. You do not want to look ignorant by having to search for relevant information while you have the person on the phone. Establish rules of contact, such as how you are going to handle a belligerent person or someone who refuses to pay. Set a time limit for collecting the debt. If you are unable to establish a payment in a certain amount of days then you need to forward it to an attorney for further collection action.
The most important thing to remember when you are starting a collection agency is to keep your temper when dealing with the person owing the debt. When you stay in control you have a higher chance of collecting on the debt.