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Collection agencies dream about winning a huge contract, particularly amid an economic downturn, but managing a large assignment has many challenges.

Account Control Technology Inc. (ACT), in Canoga Park, Calif., is one of a handful of small businesses collecting student loan debt for the Department of Education (DOE). The company has been doing so since 2000, and recently performed well enough that it won an "unrestricted" contract to do the work - doubling the number of accounts it will receive.

As a result, the company must double its staff in the next 12 months. Says Donald Taylor, president at ACT, anticipating the challenge ahead, "The size of this contract is one that any business would like to have. But now we have to do the work."

Securing a large contract means more business and, more than likely, higher profits. It  usually guarantees a steady flow of work in the years ahead and it can enhance a corporate reputation while leading to more work with other clients.

But the risks are that a business may spend years trying to secure the contract, investing countless hours and millions of dollars to win it, with no assurance that the effort will pay off. In a case that has received a lot of publicity lately, the attorney general in New Jersey recently charged former employees at Outsourcing Solutions Inc. with crimes related to over-billing the state by more than $1 million for collection services.

For more about this topic, please see the October issue of Collections & Credit Risk magazine.

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