How An Industry Outsider Started An $80K/Month Debt Collection Business

Avi

•

Published: August 27th, 2022

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Avi

Founder, Fair Capital

$80K

revenue/mo

Founders

Employees

Fair Capital

thefaircapital.com

from Spring Valley, NY, USA

started September 2017

$80,000

revenue/mo

Founders

Employees

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Hello! Who are you and what business did you start?

Hello everyone! My name is Avi Grunwald; I’m the founder and CEO of Fair Capital.

I started the company in 2017 to help businesses collect unpaid receivables efficiently and positively to improve their cash flow.

While based in New York, our agency currently works with more than 600 companies nationwide. We help them collect unpaid invoices through a proven, unique, positive debt collection approach, demonstrating outstanding results.

Based on ACA International's recent report, our unique debt collection strategy demonstrated a debt collection success rate 52% higher than the industry average.

What's your backstory and how did you come up with the idea?

I was struck by the fact that so many businesses are struggling to collect payments from customers who “don't see paying their invoices as a priority.” After doing some research, it became clear to me that unpaid invoices are a problem that a majority of businesses across nearly every industry suffer from, and quite a few companies we're forced to close down due to a lack of cash as a result of unpaid invoices.

However, many businesses hesitate to hire a debt collection agency because of its bad reputation, caused by some bad apples. Others are hesitant and question its efficiency and price; some see it as too complicated, while others wait for a miracle to happen, and somehow their invoices will be paid.

Never accept the impossible as a fact or take no for an answer.

So, I began researching the industry to start a debt collection agency that would address all concerns and make using our debt collection services simple, beneficial, and suitable for all types of businesses and industries.

Getting into a highly regulated and complicated industry without prior experience was challenging. So, on the one hand, I needed industry-experienced professionals to substitute for my lack of knowledge. But on the other hand, I also wanted to get people without any prior experience so they could adapt to our unique advanced debt collection approach.

Hence, I had no choice but to assemble a team consisting of well-known industry professionals and some newcomers such as myself. I now believe, that putting together such a unique team contributed to our success.

Take us through the process of designing, prototyping, and manufacturing your first product.

In addition to working on the business formation, licensing, and so on, I spent most of my time working on strategizing and developing our actual debt collection process.

To achieve my objective of creating a debt collection agency that will achieve maximum results with a positive approach, I not only had to come up with new strategies, methods and procedures. In addition, I needed to restructure and redefine our identity so that we think of ourselves in a new light and redefine who we are. Instead of simply viewing ourselves as debt collectors, I created a culture where we see ourselves as professional mediators between creditors and debtors, which requires specialized skills and training.

It is common for people to believe that collecting past due invoices requires aggressive tactics. Although this is not always the case, I must admit that taking a positive approach may not always result in success. Thus, I worked with some great industry advisors and consultants to divide our debt collection process into three phases.

Our debt collection process typically begins with a soft start, followed by mild or mid-level debt collection tactics, and only escalates to our intensive collection unit if necessary. Dividing our practices into these three categories ensures that every debtor has a fair chance of paying off their account without the need for escalation while also providing the highest possible recovery for creditors.

Describe the process of launching the business.

I earned the trust of my first clients, mostly family and friends, by offering to do their collections for a minimal contingency fee. Their faith made it possible for me to begin my business, and I'm still grateful for that.

As time went on, we began receiving requests from more and more businesses asking us to collect their outstanding invoices. Nonetheless, our first "big" client didn't come until about five months after I launched the agency. This happened when a client assigned almost 7,000 accounts to us.

As a startup, I mailed by hand

Since launch, what has worked to attract and retain customers?

It is quite common for prospective clients to inform us that they have been recommended to us by one of our existing clients. So, It is likely that word-of-mouth continues to be our best source for gaining new clients. Additionally, I found Google ads to be very useful, and LinkedIn was also beneficial.

Though it may seem obvious, I have personally experienced leads who are referred by our existing clients closing much faster and easier than others.

The best way to retain our current clients is to provide (not just promise) exceptional customer service and deliver results that exceed expectations.

Most businesses claim to provide excellent customer service, but not all do. So to ensure that Fair Capital actually offers outstanding customer service and not just claims to do so. I put a solid effort into assuring our clients always have someone knowledgeable in the office they can talk to rather than waiting on hold or having to send multiple emails to get an answer to their questions.

Earlier this week, I had a memorable experience that showed me the value of genuine customer service. I spoke with a business owner in the construction industry looking to hire a B2B debt collection agency. We talked for a few minutes about her company's challenges in collecting past-due invoices and how we can help. During our conversation, we discussed our debt collection contingency fee and the course of action, and shortly after, she began submitting her accounts.

That same afternoon, I received a call from this new client and asked how I could help, but instead of asking for help, she told me how impressed she was with how easy it was to transfer her accounts to collections and how she had already recommended our services to four different companies she knows we're looking to hire a debt collection agency.

Through starting the business, have you learned anything particularly helpful or advantageous?

I'm not the best

The biggest lesson I've learned is that I cannot do everything. There are some things I don't seem to be good at. When I was younger, I thought I could handle everything on my own. But, with time, I realized I had to let go and trust others to handle different tasks.

Positivity is key

My experience in hiring debt collection agents taught me that positivity is the most essential quality to look for when hiring a candidate, especially when it comes to debt collection work.

I can teach someone new skills. I can train someone on how to use different programs. However, a positive attitude is something that an employee either has or doesn't have.

I have a big sign on my executive door that states “only positive attitudes allowed in this area” because a positive attitude Is the first condition to entering my office.

Advice for other entrepreneurs who want to get started or are just starting out?

I will keep this one short.

It is imperative for anyone looking to start a business to understand that the phrase "If there is a will, there is a way" is more than just a statement. Never accept the impossible as a fact or take no for an answer.

Are you looking to hire for certain positions right now?

Indeed, we are always looking for new collectors to join our team. Remember, however, that you must always put your positive attitude at the top of your resume.

Where can we go to learn more?

If you have any questions or comments, drop a comment below!