How collection agencies make money

Open a debt collection office | How to start a serious business

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When it comes to debt collection, many people automatically have a bad feeling. Dubious business deals, collecting money and contacts in shady circles are just three of the many prejudices that this professional field has to deal with. Those who are not deterred by this often sense big business in the debt collection industry. The fact is: a Open a debt collection office is not that easy and requires a lot of patience. In this article you will find out how you can set up your own debt collection company and which requirements you absolutely have to meet.

Requirements for a serious debt collection company

If you choose the path to self-employment and want to earn your money with the help of a debt collection agency, one thing should be clear from the start: This business model only works if you implement it seriously. That in turn means: Follow a whole series of regulations and meet requirements.

If you want to open a debt collection agency, you should know, among other things, the following:

  • A debt collection agency is a business subject to mandatory surveillance. Accordingly, they are sometimes subject to strict requirements that must be met in any case.
  • As the owner of a debt collection company, you must have completed training or a degree in the legal field. Only then will you receive a business license.
  • If you want to work as a debt collection service provider, you have to register.
  • In order to prove that you can be classified as a trustworthy person, you must present an impeccable police clearance certificate. You must also prove that you have no debts and that you are living in good economic circumstances.
  • As a debt collection service provider, you are not allowed to perform any other activity that conflicts with the debt collection agency. An example of this is lending money.
  • As the owner of a debt collection agency, you must be able to prove that you have the necessary specialist knowledge. This includes, for example, knowledge in the areas of commercial, securities, corporate and cost law. Both theoretical and practical expertise must be proven by appropriate certificates.

If you meet all these requirements, you can (at least in theory) open a debt collection agency. To do this, you have to register a trade with the local trade office on the one hand and have yourself entered in the legal services register on the other. The right point of contact for this is the responsible supervisory or licensing authority on site.

Important to know: In order to be entered in the legal services register, you must provide evidence of professional liability insurance with a minimum sum insured of 250,000 euros.

The road to self-employment is long and complicated

At this point, one thing should already be more than clear: opening a debt collection office is definitely not child's play. This special path to self-employment will demand a lot from you. Perseverance, understanding of complex issues, an overview, organizational talent and diligence are imperative for (prospective) debt collection service providers.

Anyone who notices even before the final approval that the process is too strenuous and complicated should think twice about whether the path is actually the right one.

What does a debt collection agency actually do in detail?

There are not only numerous myths surrounding the term debt collection, but above all question marks. Although most can at least roughly imagine what a debt collection service provider does, hardly anyone knows the exact work processes of this profession.

If you intend to open a debt collection agency, you should of course know exactly what your tasks are and what your customers will expect from you. For this reason, the most important tasks of a debt collection service provider should be briefly pointed out at this point.

Debt collection agencies help companies of all types to offer debtors to the cash register. So you are the first point of contact for everyone who is sitting on open bills and cannot manage to get the debtor to pay. The tasks of the debt collection service provider include, for example:

  • Contacting the debtor
  • Information about open invoice amounts
  • Agreement of installment or partial payments
  • Reference to legal consequences
  • Initiation of further legal measures
  • Claiming the collection costs from the debtor (according to general compensation regulations)

Serious demeanor appeals to customers

In order to receive orders as a debt collection agency, it is essential if you look professional and serious to the outside world. Hardly any company will hire you if you appear to be involved in dubious business yourself. Unreliability, an overly relaxed manner and a lack of competence are absolute no-gos that you as a debt collection service provider must avoid if you want to have long-term success with your business.

It is also important that you are not the only one who exudes professionalism. The premises in which you work also have a major impact on your external impact. Therefore, when looking for a suitable office, make sure that

  • it is in a "good area"
  • it is furnished in a friendly but straightforward manner
  • it reflects your competence
  • it doesn't look like a staging, but honestly

Winning customers as a debt collection company

In order to earn money as the owner of a debt collection agency, you are of course (like any other entrepreneur) dependent on your customers. However, it is not these but their debtors who are ultimately the ones who pay for your work.

So that you can actually make a living from your independence, it is essential that you draw attention to yourself in various ways and thus generate orders. While many debt collection agencies still rely exclusively on the old-fashioned, i.e. analogue options, newly founded companies in particular are increasingly daring to venture into the online world and see great potential here.

A high-quality website that explains your services in a comprehensible manner, offers well-prepared information and gives a professional impression should definitely be the heart of your “public relations”. Always remember: This is a free presence channel that offers you an almost infinite number of possibilities. So why not experiment a bit and, for example, start a blog or include explanatory videos to illustrate your work even better? The fact that you work in a legal, ie dry and “no frills” area, does not mean that you cannot demonstrate a little creativity every now and then and thus surprise your customers. Other measures, such as seminars, lectures or even a Facebook company page, can help you to become even more visible and to address as many potential customers as possible.


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