Collection Agency Business: How To Get Started

A collection agency is a company that goes after debts owed by businesses or private individuals. Business owners and even private individuals turn to collection agencies if they are having a trouble collecting payments from customers, especially when their accounts receivable are past due.

Debt collection is a profitable business: in the United States alone, the debt collection industry earned over $12 billion dollars in 2012.The average salary of a debt collector is $28,500.The value of the collection agency business can’t be overstated, and enterprising individuals may find it suits them on many levels.

However, the collection agency business is considered one of the least consumer-friendly industries in America due to the aggressive methods that such companies often use to collect debts. If you plan to start your own collection agency business, you can avoid that stigma by following these guidelines:

1. Learn all state and federal laws concerning debt collection. Familiarize yourself with the law before you start your own collection agency business. Different states have different laws and policies regarding how you can legally deal with people who owe money.

2. Register your business. Before you can establish your company, consult with an accountant, business advisor, or an attorney to help you process all the requirements. After that, register your business with the IRS.

3. Formulate your collection approach.Your company’s collection process is an important consideration. Determine what fees you will impose on different kinds of debts and what methods you will use to contact debtors. Be sure to create your letter templates and call scripts in advance.

4. Setup your office and equipment. You can start small by renting an office space. If you’re a small business owner, you can work from a home office. Get an Internet connection if you don’t have one already, and buy necessary equipment such as computers, desks, chairs, and file cabinets. Make sure that your phone service can handle multiple incoming and outgoing calls simultaneously.

5. Strategize your marketing. An effective marketing strategy makes it easier for potential clients to learn about your company’s services. You need business cards, flyers, and brochures to help you advertise your company. Take advantage of modern technology with social media or your own website.

6. Get started. Once all the preparations are taken care of, you can begin running your collection agency business. Start off by contacting potential clients: once you’ve made an agreement with a client, you will be sent a list of debtors to contact.

Remember to be careful when dealing with debtors so that you don’t harm your client’s relationship with its customers. Remember, debt collection firms have a bad reputation among consumers – consider it your duty to break the stereotype.

Why Business Equipment Finance Makes Sense

If you are starting a new venture, or you are expanding an existing one, then you might be going through a menacing time to set things up. It is a complex undertaking when you have to spend a lot of money for more equipment, or else the new business won’t run. Equipment procurement is an essential part of setting up a business and you don’t have much choice but to buy new gears and paraphernalia to get things started.

First, you have to plan for the equipment needed and it is important that you know how to select the products that would address your needs. After you have determined the equipment needed, you have to create a plan on how you should be paying for the equipment. If you don’t have money to spend for it, then you probably need a business equipment finance company.

What is this company that would supply financing for your equipment purchase? Basically, this is considered a smart thing to do when you are short of funds to buy equipment. Or even when you have money, you can use the equipment loans to pay for practically any kind of business equipment you require. The amount you can borrow would vary and it would depend on the equipment you are procuring, and the state of the equipment such as if it is new or a used equipment.

You would normally need financing if you need a car loan. If you have already tried a car loan, then you have probably known how the financing system works. The equipment will serve as your collateral to the company that gives business equipment finance. The interest rates are fixed which can be from 8% to 30%, depending on the term. These companies also offer a fixed length for terms, and this gives the borrower ease in repayment through having the same amount of amortization every month.

The length of the loan term would also vary, depending on the nature of the equipment and how long it is expected to be useful. There is varying depreciation of different equipment and this is to be considered before the terms can be determined. Some equipment types are given 36 months or 48 months terms. But some terms provide only 12 months for loan to be repaid.

What type of business equipment can qualify for equipment loans? All sorts of equipment would be viable for this such as: IT equipment and computers, heavy machinery, medical equipment, scientific equipment and commercial vehicles.

Thus, you can get a loan for trucks, prime-movers, tractors, tankers, laptops, desktops, servers, factory automation, robotic assembly devices and many more. The list is long and you have to talk with the company’s representative to determine if the equipment you need can be financed.

You may get advised on having a lease on your equipment and not a loan. However, with a lease, you are only renting the equipment and it won’t be yours after the lease term is done. With a loan, you own the equipment once fully paid.

Small Business Investment Companies

SBIC’s are very viable alternatives to companies that are too big for individual investors to small for venture capitalists. As such, you should contemplate working with these private investment firms in lieu of working with an individual funding source. Angel investors love to work with businesses that are already profitable. The capital you receive does not require that you give any equity to a third-party investor. There are number of differences between working with angel investors versus working with SBICs. When seeking private investment, you will need a well developed cash flow analysis which is often more important than your profit and loss statement. If you’re seeking to acquire real estate may be in your best interest to work with the small business administration rather than a private funding source or SBIC.

If your business is not recession proof, then you may have a significant amount of trouble obtain the capital that you need from an angel investor or SBIC. You should sharpen your ability to convey your idea to any potential funding source so that they can clearly understand exactly what you intend to do with their capital, and this is especially true if you intend to work with a small business investment company.

Businesses that are economically you can use some recessions, such as medical businesses are particularly popular among angel investors. Before seeking outside capital, you should always consult with a certified public accountant. SBA loans, unlike equity, requires monthly repayments of principal, which may be a good alternative than selling a substantial equity stake in your business to a third party.

Preferred shares typically do not allow angel investors to have a say in the ongoing management of your business, but this type of financing is usually very expensive. SBICs may seek a provide you with both debt and equity capital. It should be noted that a private investment firm can fire you at anytime. Angel investors usually ask for less equity than a small business investment company. Your business plan, especially that’s going to be presented to an angel investor or SBIC, should be a scientific document that showcases why this is a good investment for the individual financier.

Your CPA will be able to provide you with all the necessary information related to the cost of the associate with the capital that you are seeking. Finally, it should be noted that small business investment companies are licensed and regulated by the Small Business Administration. As such, you will have a significant ability to negotiate with these firms on an ongoing basis.