👉 Background: Collection House is an Aussie debt collection agency that was founded back in 1991. It went public in 2000 and by 2001, it was worth more than $500 million. Its main game was chasing down debts for the likes of St George Bank and the ATO.

👉 What happened: Over time, Collection House's biz kiiiinda fell down. In fact, its last half-year earnings showed losses of around $64 million and even its auditors warned the company's future was in doubt.

👉 What else: Now, Collection House has tumbled into administration after one of its few remaining assets - its investment in Volt bank - shut up shop. It just goes to show that debt collection can be a tricky business.

What's the key learning?

💡Debt collection agencies are companies that work on behalf of other companies like banks or utility providers to collect overdue debts.

💡 There are a couple of ways this business model can work:

• Option 1: In return for collecting debts, collection agencies can receive a commission on the debt of between 5% and 30%
  
  
• Option 2: Collection agencies purchase debt from other companies at a fraction of its value and pursue the debt themselves. This is the Collection House way.

💡Collection House would often buy debts at a heavy discount of 1 to 35 cents on the dollar, and earn its profits by recouping the funds. But if ya don't recoup the funds, ya don't have a profitable business.

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