Debt collection is an industry that serves an important purpose in commerce, ensuring that companies don’t drown in their unpaid accounts receivable and helping businesses to keep the doors open. That makes debt collection a potentially lucrative field for people with the right set of skills, and there trillions of dollars in outstanding consumer debt floating around at any given time. But before diving in, it’s important to analyze some of the factors that go into success as a debt collector, as not all collection agencies make money, and profit is not guaranteed.
Are You Cut Out for the Job?
One of the main questions to ask yourself is whether or not you’re really cut out for the job. In many ways, debt collection is like call center sales – it’s a communication-driven process, done without any face-to-face contact, in which you essentially have to convince the person on the other end of the phone that it’s in their best interest to give you money they might not necessarily want to part with. But the unwarranted negative reputation of salespeople is nothing compared to what debt collectors face. For better or worse, dealing with a debt collector can bring out hostility in people, even when the collector is completely friendly and professional. A lot of people just aren’t cut out to deal with evasive or hostile debtors, and that has a negative impact on the ability to close settlements.
Doing Things the Right Way
With the above point in mind, a major factor in how successful and profitable your debt collection efforts will be is how committed you are to doing things the right way. You may find yourself starting on the back foot each time since debtors you’re chasing probably have preconceived notions about collection agencies. That makes doing things by the book a priority, as the best way to quickly settle an account is to break down those preconceived notions and to convince debtors that they’re working with an ethical professional. It’s impossible to overstate the importance of carefully reviewing all of the paperwork for accuracy, constantly treating debtors with respect, and following all of the relevant laws and regulations which include statutes and rules regarding call times.
Buying or Collecting?
One major factor impacting profitability is whether or not your agency is buying up debt or simply collecting on it. If you’re in collections only, you’ll earn a commission on the debts you settle, whereas if you’re buying up debt, you stand to potentially make significantly more. That’s because you can often buy up debt at significantly reduced rates, pumping up your profits when those debts close. The flipside of that, of course, is that you’re also buying up the risk, and any defaulted debts that can’t be collected on are money out of your pocket instead of someone else’s. So while there is relatively little risk in the collection, becoming a buyer does offer the possibility of significantly greater profits – if you have the capital and the stomach necessary to ride out the risk.
Utilizing Technology to Enhance Collection
Juggling multiple accounts at once can be difficult, and losing track of where each debtor is in the collection process can be detrimental to the overall profitability of your agency. One of the best ways to avoid that is to utilize technology to keep everything in order for you and to automate as much of the process as possible. Arguably the best tool for that job is customer resource management software, like CRMDialer. With CRM debt collection, each of the debtors you’re working with can be assigned an account in your lead management system, with every single contact you have with them automatically logged to that account. If you’re using CRMDialer, that includes phone calls, as the built-in power dialer enables you to handle all of your callings from within the CRM, supercharging your calling efficiency and enabling you to easily log recordings or call notes for future reference. Once an account is ready to be settled, you can easily collect payment both online and right over the phone, thanks to CRMDialer’s advanced electronic payments suite.
For more information on these features and the many others included in CRMDialer, start your free trial today!