Nobody is going to tell you that the collection business is easy. In fact, it’s one of the harder businesses to really make money in. After all, your job is to collect debts that credit card issuers, banks and other businesses couldn’t collect on.
That’s why making sure you aren’t spending more money on your day to day business operations than you really need to is important if you want to earn as much profit as possible. Use these seven tips to help you lower your overhead so you can put more money in your pocket at the end of the month.
1. Change Locations
Where your collection office is makes a big difference when it comes to how much rent you pay. While it can be wonderful to have an office in a nice area, you really don’t need to pay high rent fees since only employees see your location.
Look for an out of the way office or one in a developing or cost-effective area to reduce your overhead.
2. Try VOIP
Phone costs are obviously a big one when you’re in the collection business, but you might be overpaying if you have a traditional phone system. Instead, try switching to voice over internet (VOIP) services.
You could pay just a fraction of the cost of what you currently pay for traditional land line phone service.
3. Pay Commission
Many collection agencies already pay commission, but raising the rate and reducing base salary can help you keep more money in your pocket. Agents that are good at their job will actually earn more and so will you.
Consider staggering your commission based on how much an agent brings in. The more they bring in the more they take home.
4. Go Paperless
Paper records plain cost more money than keeping everything on hard drives or a remote server. Skip printing your documents and you’ll save plenty on paper, ink and replacement machines.
5. Buy Used Office Furniture
New office furniture is nice, but when you want to maximize profit, it should be one of the first things to go. Pick high-quality used office furniture that will last for years but cost only a fraction of the price of new furniture.
6. Update Business Machines
Computers, fax machines, printers and telephones all need to function properly when you’re running a business. However, throwing old ones out and replacing them with new models every year or 18 months can be pretty wasteful.
Spend money updating computers and repairing items like printers. You’ll save money, and nobody is going to know that your computer monitor is five years old.
7. Switch Merchant Providers
As a debt collector, you’re in a high-risk business since you’re collecting from people who have already defaulted once. That’s why the fees you pay for processing credit cards can be shockingly high. For this you want to get a collection agency merchant account thats lower in rate and fees.
Switching merchant providers to one that will give you a better rate like Painless Processing, can help you keep more of the money you collect.