Q&A with: Collections expert Michelle Dunn

From the moment Michelle Dunn walked into the coffee shop, you just knew this was no ordinary collections agent. Long chestnut hair, fashionably dressed in a short skirt and high-heeled boots, a bright, friendly smile, she almost sparked with energy. Minutes later, the most unusual thing happened: People greeted her. Happily.

After working in collections for 17 years and having her own agency since 1998, Dunn – a resident of Groton, N.H. — has been featured in such national publications as PC Magazine, Home Business Magazine, Ladies Home Journal and The Wall Street Journal, as well as made appearances on National Public Radio.

The 37-year-old mother of two recently sold her business to concentrate full-time on publishing her “Collecting Money” series of books, speaking engagements and consulting with other businesses to help make them stronger financially and to help those who had fallen on hard times keep a bit of self-respect—not to mention a better credit rating—through payment plans.

Q. Why did you decide to start your own collections agency?

A. When I got divorced, I had to get a job. I went to the Rochester Shoe Tree Company and became the accounts receivable clerk. A month later, the credit manager quit. I took over her job. So it wasn’t like I planned to do credit, it just sort of happened.

It turned out I liked it, and I was very good at it. I took night classes to learn more — accounting, financial analysis, credit and collections.

As you probably noticed I’m hyper; I need to be busy. I got another job, but I was traveling to Hooksett from Plymouth. I was getting divorced, I was trying to raise two kids, I was driving two hours a day. It was too much. That was when I decided to start my own collections agency. I thought if I could do this for other companies and I was good at it, I can do it for myself.

I started M.A.D. Collection Agency in 1998. I had a lot of publicity with my business, since it was pretty uncommon to have a woman-owned collection agency. At the time, I was just one of only three other women in the country that were members of the American Collections Association.

Q. You have written several books on collections, including one about starting a collection agency. That isn’t the typical home-based business most people think of.

A. “Starting a Collection Agency” was my first book. I wrote it in 2000. It really surprises me how many people buy this book. I’ve sold over 5,000 copies. I already have pre-orders for the second edition I’m working on now.

Q. Tell me a little more about your newest book, “Become the Squeaky Wheel: A Credit & Collections Guide for Everyone.”

A. Business owners will learn how to put a credit policy in place, when to place accounts with the collections agency, know how to set up accounts, what information to send to the collections agency, etc. They also learn about what to about credit limits and approving credit.

With a good credit policy, the business will collect more money, the agency will collect more money if the account goes to them.

It’s especially good for businesses that are just starting up.

Q. Do most small-business owners go into business not having a clue about credit?

A. When I sold my business, I had over 600 clients and $4 million of debt. I would say 80 percent of my clients did not have a credit policy.

I believe a collections policy should be a part of every business plan. When you go to the bank, you can tell them, “I’m going to pay you back, and with my credit policy, this is how I’m going avoid bad debt.”

If business owners only do one thing for their collections, get some credit applications printed up. My books have examples, Staples has them. Just stamp your name on them or have your letterhead printed on them.

Get one for every client and just put it in a file folder. It should have their name, address, phone number, cell number, where they work, work number, bank name, bank number. That information you’ve collected is like gold to an agency if they have to research the debt. It will help you get money.

Q. You also offer information on extending credit. What are the advantages to a business, especially a small business, about extending credit?

A. If they can extend credit, they can make more sales and make more money.

You’re really extending faith in another company or another person. You really want to do business with them, you trust them.

People will buy more if they can buy on credit than if they have to pay right now. So you can make more sales.

Q. Who shouldn’t extend credit?

A. Everyone can extend credit if they do it right. You can always extend credit after a fashion by asking for payment installments, like contractors. Ask for a portion up front, during the job, and have the smallest portion due at the end of the job. If they don’t pay, you stop work.

Q. How are New Hampshire’s collections laws?

A. They are very lenient — more lenient than some of other states. For instance, in some states you must be licensed and bonded to have an agency, but in New Hampshire you don’t. The federal laws are pretty strict, however.

Q. You certainly don’t seem like you run around with a baseball bat and repo people’s cars. Is there a negative stereotype associated with collections agencies?

A. Absolutely. I think part of it is justified because I do know a lot of collection agencies that do not follow the law. Consumers don’t always know the law, and some collection agencies know that and get away with it.

When you make collection calls there are things you can and cannot do. You can only call between 8 a.m. and 9 p.m. You can call people at work unless the employer asks you not to. If you ever call there again, it’s illegal. You can’t threaten, you can’t swear, you can’t call repeatedly.

Some agencies have a call center, and all these people in cubicles are getting paid by how much they collect. They will do whatever to get the money. They may tell the person that if they don’t pay, they’ll be arrested, which is not true. They may tell them they are going to sue them but have no intention of doing so, which is illegal.

Q. Is it widespread in the industry?

A. A lot of people do these things — use scare tactics. And it’s terrible because it gives all collections agencies a bad name. They’re not all bad. Mine was a good one. I didn’t want to be in trouble. Oh my gosh, you’d lose your business!

I found that I collected more money being nice to people and helping them with a payment schedule. I would work closely with the Consumer Credit Counseling office in Laconia. I would help them and still get money for my clients. I got thank-you cards from debtors.

I know what it’s like. I got divorced; I had two children. I know what’s it’s like to not be able to buy milk. I’ve been there.