Do you have good administrative and letter writing skills? Then this home based business idea might suit you.
One of the most important parts of running a business lies in collecting and receiving payments from customers.
However, this aspect of business is usually overlooked. Most businesses only start to deal with this when customers fail to pay their bills on time.
And many businesses would prefer someone else taking over the headache of collecting payments, instead of the business owner or employee personally running after these people.
You could set up a collections service offering local businesses different options for collecting these payments due.
If you could do this with empathy and professionalism, this could prove to be a lucrative business idea.
You could start your home based business by setting up a large portfolio of collection letters, instructions, CDs, templates and of course, any help you can think of to offer to these businesses.
The most important aspect of your service is the collection letter. These collection letters are also called "dunning letters" and are a very important tool for payment collections.
When framing a collection letter, keep its main objective in mind; that the business wants the payment of the money due them, while at the same time retaining the goodwill of the customer.
This is why there are different types of collection letters to send to the customers at different times in the collection process.
First of all, send a reminder to the customer of the past due amount to be paid to the business.
You will want to send a letter that creates an impression that the customer had forgotten to send the money and will send payment upon receipt of your reminder letter.
If this letter fails to get any response from the customer, you could send a second polite reminder letter.
If this still doesn’t get a response, you will have to draft another letter stating the right of the business to seek legal help to recover the money from the customer.
With this letter, most customers make the necessary payments. However, if this too fails, then of course, the next letter that will reach the customer will be the legal notice!
When framing collection letters, keep their length to one page with brief, short sentences and paragraphs.
The customer will have not have the patience to read long letters; so write a letter that is short, and to the point.
Avoid using complex words in the letter; use simple words that will make it easier for the customer to understand. Make sure the tone of the first few letters are non-threatening. Make it sound as much of a reminder as possible.
Signing the letter personally will give a better result and response from the customer too.
Of course, date the letters, and mention the total amount due to the business, the date of pending invoices and the date the expected payment was due.
Be firm, and at the same time, urgent and unapologetic in the letters. This is the best way to get a positive response from the customers you are working to collect from.
Now here's a creative twist on this business idea...
Besides just offering mail and phone collection services, why not add a personal touch?
Perhaps with your clients permission you can visit their customer and act as a liaison to find out if there may be some personal or other problems that hinder the customer from making payment.
You could offer the goodwill of your client and help to work things out so the customer can still make some kind of payment without enduring excessive hardship.
That way you can maintain the goodwill between your clients and their customers and be more effective in your collections too.
Customers experiencing economic struggles will be more likely to pay a business that is willing to work with them, than one who doesn't take the time to personally work with them and understand their situation.
So this is where the empathy part of this service comes in. Think about how you could add this touch to your collections and convey that to your prospective clients.
Now this is one of those small business ideas that allows you to work from home and set your own hours, and requires very little start up cost.
And to start marketing this business idea you should have a dedicated phone line, and listings in local phone and internet directories.
You will also need good typing and grammar skills, along with basic organizational and administrative skills to keep good records and logs of each collection process.
And of course you need a computer, printer, word processing software and quality stationary supplies, but most people already have a computer at home.
Be sure to create a simple but professional letterhead for your business and use this not only in your collection letters, but in your communications with your business clients too.
And probably the best way to get clients is to mail letters outlining your services and fees to area businesses.
Follow up by visiting them in person and leave information and your business card.
Show interested prospective clients sample collection letters and outline your collection process to them.
Be specific as to how you can tailor it to fit their needs and requirements regarding how many letters they would want sent before mentioning legal action to a customer.
It would probably be best to set your fees according to the number of letters sent, and you will have to do some research to find out what comparable rates for this service are in your area.
If you prepare carefully and present yourself professionally you should be able to steadily acquire good clients and build a solid business.
