The Evolution of the Credit Repair Business

Editor’s Note: This is part two of the series Profile of the Credit Repair Customer.

While it is illegal to accept payment in advance of the service before the “service that you contract for” is completely performed, it is acceptable, according to legal counsel, to “require” customers to establish a Special Purpose Account (SPA) with a qualified company. We recommend for these accounts.

What is Trans2pay and how does it work?

The customer sets up a new bank account to set aside funds to pay for services after they have been performed. Nothing more and nothing less.

The best part is that the accounts are not connected to a debit card nor they have checks. Not to be overstated, the consumer has access to the funds in the SPA but only after giving a seven-day notice and only after you receive notice that the consumer has requested to close or withdraw money from the account. This gives the customer a cooling off period and provides you with an opportunity to re-sell the customer.

Whether you are on a monthly model or pay for delete, “requiring” your prospective customer establish this account as a non-negotiable will virtually eliminate the collection problems that exist in this industry. Research indicates that as much as 25% of all revenue remains uncollected. And this is after a considerable and consistent collection effort.

That one fact alone causes most credit repair companies to fail or substantially reduces the necessary cash flow and profits to be truly successful. According to debt settlement companies that have been using the SPA model since 2003, “up to 95% of consumers that make their first payment into the SPA complete the program.”

Making the SPA a requirement in your enterprise is without a doubt a necessary move. Not only does it “virtually” eliminate the collection issues but it also serves as a great indicator of the consumer’s willingness to pay you after the service has been fully performed. We can all attest to the fact that individuals with bad credit “don’t mind owing you.” The best time to get money from a consumer with bad credit is before you do the work. But since this is impossible, the next best thing is to gauge their fortitude to keep their end of the bargain/contract by agreeing to set aside up to as much as 100% of the cost outlined in the contract.

Whether Pay For Delete of Monthly Recurring Revenue Model, the ability to know that the consumer’s funds are good prior to the work, and not having to chase down the customer for payment after “they have gotten what they want” is a revolutionary development in the credit repair industry. Yes, the consumer has an additional monthly fee of $10 per month but the savings for you far outweighs any objection to price. Let’s put it this way: if you will only collect 75% of the fees that you earn after considerable effort, in most cases, the credit repair company would be better paying the $10 per month fee simply to “virtually” eliminate cash management and collection issues.

The best part about the SPA is that the consumer provides you with “pre-authorization” to submit a request for payment to Trans2pay after you have submitted an invoice for payment. Of course, the moment you take advantage of this program by collecting funds from the consumer’s account before satisfactory work has been done will be the day your privileges are revoked.

We presume that a number of customers will not choose to do business with you because of this requirement. They may be the same 25% of your customers that do not intend to pay you anyway. Perhaps the requirement of the SPA will eliminate all of these customers.

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