Gene, I saw on another group that you have 1 collector for 700 accounts. We are thinking about getting into either BHPH or Lease Here Pay Here. It looks like your collections are real good. How does one collector stay on top of it all. What is the most one collector can handle on their own?
The average BHPH uses 1 collector for 250 accounts. That's the benchmark. Our operation is different than the average BHPH. For us the business model makes the collections easier. When you hire a collector, get someone from a similar industry that works in your area. They will already know alot of the customers.
Gayle I think we found the best answer for collections! A new bank called WOODFOREST BANK is in most of the super Walmarts It is a second chance bank. We MAKE our customers open an account with a debit card. Once a month, in our case the 25th we debit the account. It is set up recurring so after the first month it debit's automatic on the 25th. On the 26th we know who didn't go through and call them. They have 3 days to get the money in office or they get shut off. I don't have a collection problem. Ralph
I see you asking lot's of good questions about BHPH and LHPH. After 19 years of this business I have found that there is more than one way to setup an operation. I found that a better car gives you a better customer. You cannot "demand" payment from everyone. Your collections will be directly effected by your business model and deal setup. I can help you if you get to that point. 479-967-3192 Gene
I think its tough to decide who is going to pay, and who is not, and remember if you are in the BHPH business you are in the business of financing people who are not going to pay. Thats kind of the whole deal with the business. I mean of course a lot of people are going to pay and pay on time, but you are in the business to finance risky deals, otherwise you would be getting bank or secondary financing for your customers or they would be buying new. I think weekly payments work best so if someone gets behind they can get caught up quickly. My husband is always easier on people than I am with payments. My thought is they are going to pay you or they are going to pay someone else so make sure they know its not acceptable to be late on payments. If you let them, they will be. Monitor the account early on. If they are late make sure you call them immediatly. Start a good pattern. Once someone is late its hard for them to catch up. Have a good system to be able to repo cars when you need to. We use GPS trackers. I wouldn't do business with out them. Having them helps you sell more cars because you don't have to worry about whether you are going to find them. Where they live isn't an issue. Also if they are late and you can locate the vehicle you have some wiggle room to let them slide. Some people use the payment systems where there is a buzzer and shut off feature. I don't like personally myself but only because of what I imagine the problems could be, not because I have tried that. A lot of people like it and they have the capability of doing both. We do not have a problem with collections. I do it myself maybe once a week. We have a few people who are late consistently late but still paying. We have been doing this for 20 + years. My husband and I do it all ourselves with no employees right now. If you have any questions feel free to call me. 321-279-1212. I think we have seen it all.
Ralph, sounds like a good idea you have. Have you checked into the legal issues of making customers get an account with a bank? I am not sure, but I would venture to guess, in the state of Florida anyway, you can not force a customer to get a loan with one particular bank in order to get financing. Has that be tested in your state? I know you can't make them get insurance with a particular insurance company. I just saw something about dealers making customers get identity theft protection as part of the loan and that was not legal. I know one bad misstep could cost a fortune.