Cash Management Secrets

Proven cash management strategies that improve cash flow, collect past due money, and increases profits in tight credit markets.

Secrets of Debt Collection Business

Unfortunately, most business owners don't understand how easy it is to start a collections business. In this note, what you'll learn will change the way you hire outside services.

First, in the back of business opportunity magazines any individual can buy a kit to be instantly in the collections business. They just need a computer, a printer, and postage machine. That's it.

I'm not over simplifying this either, many of today's collections agencies that promise you great results are nothing more than a mail order kit of letters, telephone scripts, and basic office procedures.

If it doesn't take any skills to start a collections business … why would you send hard-earned accounts to someone who isn't trained in collection law, someone who doesn't do anymore than send letters, or someone who might not have been in business yesterday?

If you choose to outsource your collections efforts, here are questions you must ask to insure you get a firm that knows how to create results:

1. Are they a professional collections agency? Professional agencies will be members of the American Creditors Association, in business for five or more years, and have a training program for each collections agent.
2. Do you protect me from legal liability? Professional agencies have their own network of lawyers, hold multiple state licenses, and have an audit process.
3. What other services do you provide? Real collections agencies also offer revenue retention, customer relationship management, and customer service programs.
4. What is your collection percentage? The industry average is 11% collected, you want a firm that uses a system that collection 25% plus of your money with low fees.
5. Do you accept young accounts? Your professional collections agency should have programs to pursue young accounts as well as those older than 150 days.
6. Do you offer a pay for service option? Most collections agencies start you on a "percentage collected" basis because that maximizes their earnings; professional firms offer fixed rate "pay for service" options.

Your money is too important to trust to some unreliable operator who will collect your fees and then never call about your accounts. Instead, look for a solid collections provider that offers you a range of services specially tailored to your needs.

Posted by Justin Hitt on November 20, 2006 11:20 AM | Permalink

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