Commercial debt collection agency alternative: commercial debt recovery and B2B debt collection services on a flat fee

A commercial debt collection agency recovers debts that one business owes another: unpaid invoices, trade credit, equipment leases, freight charges, professional fees. It is a different business from consumer collections, and the difference is not cosmetic.

Consumer collectors operate under the Fair Debt Collection Practices Act, which by its own definition at 15 U.S.C. 1692a(5) covers obligations incurred primarily for personal, family or household purposes. A debt a company owes for goods it resold does not meet that definition, so the FDCPA generally does not reach commercial collection at all. Regulation F, the CFPB rule that caps consumer collection calls at seven attempts about a particular debt in seven days and restricts contact to 8am through 9pm in the debtor's local time, follows the FDCPA's scope and likewise does not bind pure B2B work.

That does not make commercial collection unregulated. State law still applies. Around 45 states license or register collection agencies, with surety bonds running from about $5,000 to $300,000, and Florida requires a $50,000 bond specifically for commercial collections, the highest in the country. Texas requires third-party collectors to file a $10,000 bond with the Secretary of State under Finance Code 392.101. Telephone contact is still governed by the TCPA. And the bankruptcy automatic stay stops everything the moment a debtor files, commercial or not.

The other structural fact worth knowing before you sign: nearly every one of those licensing regimes is aimed at third-party collectors, meaning a business that collects debts owed to somebody else. A company chasing its own invoices in its own name is a first-party creditor and generally sits outside them. California is the cleanest example. The Debt Collection Licensing Act at Financial Code 100002 applies to consumer debt owed by a natural person for personal, family or household purposes, so a California business collecting its own B2B invoices needs no DFPI license.

Commercial collection is sold on contingency almost without exception: no recovery, no fee. The published and widely quoted US range for B2B accounts is roughly 20% to 35%, moving toward 50% on small balances and accounts more than a year or two old. Rates are driven by three things, in this order: age of the debt, size of the claim, and how many accounts you place a year.

Most commercial agencies quote per placement and publish nothing, which makes comparison shopping hard. The Kaplan Group is a useful exception because it publishes a claim-size rate card, read at source on 31 August 2026: 50% on claims of $1,000 and under, 25% from $1,000 to $5,000, 20% from $5,000 to $50,000, 15% from $50,000 to $500,000, and 10% on anything above $500,000. It also puts contingency litigation costs at roughly $500 to $1,200. Treat that as a reference point rather than a market price, but it is a real, citable number in a category that mostly refuses to give one.

Two costs are easy to miss. The first is the minimum fee per file. Many commercial agencies will not accept balances under $500 to $1,000, and on the ones they do accept a flat minimum fee can work out well above the headline percentage. The second is the rate step-up on legal escalation: agencies commonly raise the contingency to 30% to 50% once a file is forwarded for suit, on top of court costs.

We keep a fuller breakdown, with worked examples, on the page covering how much collection agencies charge.

Place the account when the thing standing between you and the money is something you genuinely cannot do. Concretely, that means:

• The debtor has gone dark or moved. Skip tracing and asset location need database access and investigators. There is no software answer to a company that has quietly reincorporated under a new name.
• The balance is past 180 days. Recovery on invoices that old often falls below 15%. A percentage of something beats all of nothing, and at that point the relationship is already over.
• The debtor is disputing rather than delaying. A genuine dispute over quality, quantity or scope needs a negotiator or a lawyer, not another reminder.
• Judgment enforcement is the next step. Getting a judgment and collecting one are different jobs. Once you are into bank levies, debtor examinations and liens, you want people who do that daily.
• You are outside the statute of limitations window and running out of time. Written contract limitation periods run from three to ten years by state, with four to six most common, and UCC 2-725 sets four years for the sale of goods in every state except Louisiana.

Place it, and place it properly: give the agency the contract, the invoice, the delivery evidence and your full contact log. The quality of that file changes the recovery rate more than the choice of agency does.

The economics of commercial collection are dominated by one curve. Invoices under 90 days past due recover at roughly 70% or better. Past 180 days that drops to below 15%. Almost the entire value of a collections process sits in the first 90 days, and that is exactly the window where an agency adds the least, because the debtor is not hiding, is not disputing, and in most cases is simply behind on its own payables.

Handing a 45-day invoice to a commercial agency means paying 20% to 35% to send messages you could have sent, and permanently changing how that customer sees you. Once the account is placed, the agency is the counterparty. You do not control the tone, you do not see the replies in real time, and the customer's next purchase order goes somewhere else.

The first-party alternative keeps everything in your name. You send the reminders, the firm follow-up and the formal demand under your own letterhead, on a schedule that does not depend on anyone remembering. Where a business does this well, the accounts that reach day 90 still unpaid are a small fraction of what they were, and those are the ones worth a contingency fee. This is what first-party collections means in practice, and the difference between the two models is set out in detail in our comparison of first-party and third-party debt collection.

Replacing an agency's early-stage work is a narrow, specific job, and most accounts receivable tools only do part of it. Four things matter.

It has to escalate, not just remind

A tool that sends the same polite nudge five times has not replaced anything. The sequence has to change register: reminder, firm follow-up, formal demand citing the contract, final notice stating the next step. QuickBooks Online caps you at three automatic reminders and Xero at five, and both go quiet after that, which is precisely where commercial recovery begins. Our payment reminder software page covers where those ceilings sit and what runs past them.

It has to work more than one channel

Email alone is the weakest channel in collections because it is the easiest to ignore. Email, SMS and voice on the same timeline, with contact-hour rules applied, is what an agency does on day one.

It has to keep a defensible record

Every message, timestamp, recipient and outcome logged and exportable. That log is what settles a later argument about whether the customer was given notice, and it is what you hand to an agency or an attorney if the account does eventually get placed.

It has to be priced so that using it is never a judgment call

Contingency pricing makes you hesitate on small balances, because a 25% fee on an $800 invoice is not worth the paperwork. A flat monthly fee removes that calculation entirely: every open invoice goes into the sequence, including the small ones that agencies will not touch and that quietly add up to real money.

If you want the wider vendor landscape rather than this specific use case, we maintain an honest roundup of the best debt collection software, and a dedicated page on B2B debt collection for teams that already know they want to keep the work in-house.

Businesses routinely under-collect because they never add what their own contract already entitles them to. Two rules to know.

First, you can only collect amounts the agreement creating the debt authorizes, or that law permits. That principle is written into the FDCPA at 15 U.S.C. 1692f(1) for consumer debt, and it is the sensible standard for commercial work too. If your invoice terms do not mention a late fee or an interest rate, adding one after the fact invites a dispute.

Second, most states set a default rate when the contract is silent. California Civil Code 3289(b) gives a post-1986 contract with no stated rate 10% a year after breach. Texas Finance Code 302.002 gives 6% a year, starting on the 30th day after the amount was due. Those are statutory defaults, not permission to invent a number.

Attorney fees follow the same logic. They are recoverable when a contract or a statute provides for them. In Texas, CPRC 38.001(b) as amended by HB 1578 allows recovery against an individual or organization for actions filed on or after 1 September 2021, which reversed the older position that LLCs escaped fee awards, and 38.002 requires that the claim was presented and not tendered within 30 days. In California, Civil Code 1717 makes a one-sided attorney fee clause reciprocal and cannot be waived by contract. Our page on legal action for non-payment of invoices goes through the escalation from demand to suit.

This is general information about how commercial collection works in the United States, not legal advice. Rules vary by state and by contract, and the debtor's state law usually governs collection conduct.