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New Payment Solutions for Collection Agencies
The Conundrum for Collection Agencies Collection agencies and accounts receivable management companies have long been the black sheep in the eyes of credit card companies and processors. Anyone attempting to set up a merchant account as a third party debt collector can certainly attest to this fact as they are routinely asked to pay incredible processing fees and even hold a reserve of thousands of dollars to protect the credit card processing vendor. While this may have been a valid practice in the 1980s and 1990s, it has been offset by the flood of debit cards and ACH transfers that are now the preferred method of payment for most debtors because the previous risks are simply not there for any of the parties involved. However, collection agencies are still penalized as if there has been no shift for the rest of the business world. The agencies that specialize in small business and medical accounts are the hardest hit with these penalties because the majority of their payments are $500.00 or less. They are simply losing too much in per-transaction fees, increased fee percentages, and the dreaded reserve of funds to sustain profits while accepting credit or debit cards as third party debt collectors. Help Is Coming There have been others to recognize the shortcomings of the current system for all businesses in today's market. Some of these people have started a revolution the market with their own version of payment processing and money transfer solutions. They have taken the banking aspect out of processing payments for all merchants, including debt collectors, and facilitated a direct transfer of funds between parties. The trend is not only for collection agencies, either. The state of Iowa announced in January, 2013 that they will be accepting payments from one such company for the payment of state taxes. These companies are actively and quickly moving the trend from processing credit cards to a "cash-based" money transfer system that alleviates the demands that large banks place on small businesses, including collection agencies. Why the Trend? First, the processing fees charged by the processors that facilitate direct fund transfers are incredibly low. While processing a credit card, collection agencies are typically charged $0.30 - $0.50 per transaction on top of a 5% fee. That means that taking a payment of $50 costs the collection agency around $3. Small business collection agencies simply cannot afford this loss of profit on accounts and will often resort to other methods of payment that are less effective. The newer fund transfer companies on the market charge debt collectors, and all businesses, around $0.25 to process a transaction of $10 or more via ACH transfer. On the same $50 payment, that's an additional $2.75 that the collection agency brings in profit that would have been going into someone else's pocket before it even hit the door. While traditional processors consider demand a reserve because they consider the transfers "high risk", these companies eliminate the risk for all small businesses by facilitating direct fund transfers. Interestingly, the transfers are safer for both the person paying their debt and the collection agency because they are not tied to a credit or debit card number that contains personal information. Finally, almost all of these companies have apps for smart phones that allow complete control and access to your information and payments. It's About Time These new payment processors are certainly the face of the future for all businesses, collection agencies, and person-to-person fund transfers. Gone are the days of discrimination against collection agencies because of the practices that were utilized 30 years ago, and the new age of debt collection and payment processing for all small business can begin. Robert Crawford Managing Member RTC Financial, LLC RTC Financial, LLC utilizes one of the new fund transfer processors mentioned in this article to keep the costs of paying debt as low as possible. Contact us today to see the difference in the new age of debt collection. http://www.rtcfinancial.com ...read more
By RTC Financial, LLC May 08, 2013
Treating People With Respect
Out With the Old What do you think of when you think of debt collectors and collection agencies? We all have preconceptions about this industry and almost all of them are quite negative. The career debt collectors that come to mind are from the 1980s when brutal, dishonest, and scare tactics were considered the proper way to do business. Unfortunately in today's collection agencies, these dinosaurs from the days gone by are often lifted onto a pedestal and celebrated as the heroes of the profession. This leads to new recruits believing that this is still the way to do business. What collection professionals have failed to notice is a significant societal shift in the way people think about debt, money, and themselves in general. Today's population is much more informed about the legal intricacies of what it is that a debt collector is and is not allowed to do. We have experts like Clark Howard telling us exactly how to handle a debt collector, what things are allowed, and what to do if we feel that the person demanding our money has stepped outside of these bounds. In general, people also expect to be respected and understood by anyone that interacts with them; this is not an unreasonable expectation, but collection agency management staff typically discourage any semblance of empathy as they are trapped in the mindset that it will be perceived as weakness. Stop the Madness There is a more effective way to communicate with a person that owes another person or company money, and in the debt collection industry communication equates results. It simply does not make sense to try to bully someone into doing something that they don't want do and expect positive results from a population that watches public service announcements about "how to spot a bully" and "and to stop bullying." These tactics will generally cause most people to have the thoughts, "why am I being treated like I kicked this man's dog?" and "I don't have to deal with this!" before they even consider the merits of the facts buried in a collector's harsh statements. However, initially treating someone with respect and showing a true desire to help them resolve their debt will typically have a person at least consider the primary reason for the call. A debt collector must not forget that a person simply cannot pay $200 per month on an account if they only have $50 left over after paying their bills. Even suggesting that a person ask their friends to pay their debt for them is degrading and will almost always be met with a negative response Of course there will always be those that neglect their obligations and don't concern themselves with fulfilling their end of a bargain. In these situations more interesting tactics must be considered. The fact remains that everyone should at least be given the opportunity to be worthy of respect by a debt collector. The New Collector We can begin by considering the occupation of calling people that owe debt as "account resolution specialists" rather than "debt collectors". Today's debt resolvers must be empathetic, responsive, and genuinely interested in helping people get out of a situation in which they don't want to be to begin with. Not only is it possible, but it is extremely effective for professionals in the industry to display understanding that the situation is urgent to everyone involved and offer solutions. An account resolution specialist must do everything possible to allow a person to pay within their means and resolve the account on their own. This will instill a feeling of pride in the debtor for completing the process and have extraordinary results in the positive closure of accounts. Proper Business Equals Success The first time that a previous debtor writes "thanks for your help! <smileyface>" on their check to pay a debt is the moment that a previous debt collector (now an account resolution specialist) will realize that they've hit on something that has been missed for decades and unlocked the new secret to success in a mostly hated industry. Treating people properly is not only the right thing to do, it will help agencies that specialize in account resolution be more lucrative. Robert Crawford Managing Member http://www.rtcfinancial.com ...read more
By RTC Financial, LLC April 14, 2013
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