The Collections-Agency Partner Who Knows There’s No Such Thing As an Unpaid Bill

By
Photo: Gary Morrison/Getty Images

Brent Anderson, 48
Partner, Collections Agency
Chaplain, Minnesota

Collections is either in your blood or it’s not. If you can’t discuss the issues like money and debts without becoming squirmy or uncomfortable, you find out very quickly. I discovered real early in my career that I can.

I chose it at the time because it was advertised as a decent-paying option for a young kid. During a five-year period, I’d sold leather jackets for a company that was then called Berman Buckskin. I was a broiler chef at a restaurant. I was a bartender at a country club. I was a server.

I had a young family and I had more responsibilities than privileges and I needed to get busy. So I started doing it. I ended up making more than I thought I would make because of the commission. It was something I was good at. It didn’t make me feel overwhelmed or stressed out or like I couldn’t take it.

I worked for a company called Fingerhut and then for a guy that owned some commercial real estate. After that, I worked for a company called Allied Interstate. And with commission, you know, I was just killing. When my bosses learned that I was interviewing for other things, they promoted me. I kept collecting very large payments and even set some records. And by 1995, I was national director at another firm, managing a staff.

So that’s kind of the story. It was largely an accident.

For the last six years, I’m a partner in Summit Account Resolution, a collections agency in Chaplain, Minnesota, which is a suburb of the Twin Cities.

At any given time, there’s between 20 and 30 of us. I have some collections representatives or “specialists,” which I like to call them. And then we have some administrative staff that might do things like data entry or accounting.

I’m kind of an overseer. And my main, specific duty consists primarily of generating new business for the company, talking with prospective clients to whom money might be owed and working out deals with them to retain our services on a contingency basis for our fees.

Probably half of our business is medical providers — dentists, doctors, a specialist, hospitals. We also do lease-banking collections. So for example, if a business leases computer stations, fax machines, or even a bulldozer or something like that, we might collect for the bank that backed that lease if the lessee isn’t paying.

Another thing might be asset recovery where we do investigations to find things like heavy construction machinery that’s wandered off like that in the field. We don’t do the repossession. We do the investigation to locate where it is and discuss with property owners, building owners, wherever that stuff is located and work out an amicable return of that asset.

The way the contingency works is, say a client comes to me saying, “Someone owes me $1,000. I’m going to place that account with your office.” I assign that to one of my representatives and we make attempts to collect on that debt and take care of all the expenses surrounding it until there’s a collection. If we collect a $100 payment of the thousand, then if our fee is 35 percent, which is sort of common, we’re going to take $35 of that.

With consumer debt, you’re bound by what’s called the Fair Debt Collection Practices Act. And there are, oh my goodness, a dozen other regulatory initiatives that govern consumer-debt collection. So we’re highly regulated when it comes to interacting with the consumer. With business debts, not so much. But that’s the basic idea of how our contingency works.

Now, with some clients, we collect 70 percent of their outstanding debt. With some we collect 7 percent. That’s called the recovery rate. The national average for consumer debt right now is about 17 percent. My agency collects close to 34.8 percent (laughs). We’re fairly happy with being double.

On a good day, I’ll talk to at least a dozen people I don’t know already. That’s kind of a goal. Leads come in off of the materials that we market, like articles that I might write or things like that, and if I communicate with 10 or 12 people who I’ve never communicated with, that’s an outstanding day. Because I can pretty much count on at least a third of those moving further down the sales cycle.

On a not so good day, things are too quiet. Nothing’s going on. No leads are coming in. Nobody’s talking on the phone. Nobody’s answering my inquiries.

A lot of people don’t want to change collections agencies if they’ve already got one. It’s kind of like, they don’t want to change the toilet paper vendor either because they’ve got one already! They don’t want to think about it anymore. So that makes sales very difficult. You have to be very creative in order to draw them in.

Another reason it’s hard is because our competition is dirty. There’s a whole bunch of scoundrels in the collections industry. Those are the guys you hear about when you watch Nightline or read the news. It’s an attractive business for cowboy- or gangster-wannabe-type personalities. You hear about these outfits browbeating old ladies and things like that.

Imagine how they treat their competition. Those thugs, those cowboys, become very difficult for us to deal with because they cause our insurance premiums to go up. They ruin our reputation. They do things in order to gain business that I would consider unethical and quite possibly, in some cases, illegal.

The real good companies in this business, the ones that stick around and who are successful, by and large, don’t operate that way. They can’t. Because their clients don’t put up with it. I have clients that if they found out such behavior was going on, not only would I lose that client, but I’m sure that client would pursue me legally for acting that way.

The difference between say, me and these other firms I’m describing is skilled negotiation versus tooth-pulling. We have so many collections agencies here in the Twin Cities, I have the luxury of hiring from a pretty deep talent pool. Collectiosn representatives usually work from some kind of script. But a good script can’t sound like a script. Kind of like a hostage negotiator better not have a script. Because the client’s going to be able to smell it from a mile away. So I don’t hire anybody that doesn’t have their own very good script. And natural-flowing negotiating skills.

Most people want to pay their bills. There’s barely a person, unless they are diagnosable antisocial — something like that — that doesn’t want to take care of their … They have personal pride. They have self-respect. They want to take care of their own responsibilities. And if you browbeat them about that, that causes a great deal of shame and problems and defensiveness. But if you walk them through it, and work them through it, it helps them gain that self-respect, that’s the goal. And everybody’s happy.

My collectors are selling the idea of paying the bill whereas the kind of tough-guy, cowboy-type collectors are more like, “Just pay it. You owe it. Just pay it. If you don’t do it, we’re going to do this.” And then berate them personally or shame them into paying or something like that. Those guys don’t have any skills.

If you want to be in this business for any length of time, you better be good at sales because the tough-guy, cowboy mentality just makes the job very, very difficult over time. I mean, you just get met with nothing but contention all day. And then you can’t take it.

We have less than a one percent turnover rate. And that’s because I personally don’t believe in management techniques like fear or intimidation. I don’t like using those. No, no, no, no. We use a lot of positive-reinforcement techniques, I guess you would call them. I think that’s unique to our agency, versus a lot of them. And I’ve worked at a few of them, so I know this.

We’re actually sort of selective about who we do business with. We don’t do any credit-card debt. We don’t do any payday loans. We don’t do any auto deficiencies or auto loans. Or any subprime lending of any kind. High-interest personal loans. Car loans that you have to pay every week or they shut the thing off. Those are dirty, dirty, dirty pools.

In some cases, I would consider those lenders usurious. They’re charging too much for their services. It makes it harder to collect and those consumers are more likely to sue. They’re more likely to complain. The genesis of the whole thing is a bad relationship that’s harmful in its very nature. So we don’t want your bad debt.

It’s a good career. When I walk in, and things feel like they’re humming, you get a sense that the machine is working, that everyone is happy, if I feel that sort of vibe coming out of the room, that’s satisfying.

Our numbers right now are pretty good. Actually, they’re on the rise. My representatives are making, on average, from the top dog to the smaller person, at least $60,000 to $80,000. It’s commission plus salary. For the company, I’m not going to say, but I’ll just tell you it’s north of a hundred and fifty thousand and south of a million. I feel good about that. My goal of having one year where it’s a million.

When I see an employee have such a large month that I get to hand them a paycheck that’s got five figures plus on it and they don’t know what to say, there’s something really cool about that. When I exercise my sales muscles and land something good or I start doing business with a company that I kind of believe in and I get that thrill of the hunt — fantastic.

The moral side of it — it’s not very nice if I leave my bills unpaid and you have to pick up my slack. I’ve been in this game so long, I understand that there is really no such thing as an unpaid bill. Every debt gets paid, one way or another. They get paid by either you, the debtor, your next-door neighbor, or his friends and family and everybody else by way of paying more for goods and services. If there were no debt collectors, if it was just original creditors collecting their own bad debt, statistically, it represents to every man, woman, and child in this country about $700. It’s quantifiable: that’s what our industry returns to society

Collections really is a lot like sales. It’s a twisted form of sales, almost like sales in reverse. Normally, the customer or client buys a product, so let’s give them their product. In this case, the customer or client already has the product. And now it’s time to pay for it.

The Collections Agent Who Knows Unpaid Bills Don’t Exist