Contingency Collection Agency Rates and Contingency Debt Collection Costs

Most US collection agencies take 20% to 35% of what they recover on business debts, and 40% to 50% on claims that are small, more than a year old, or already worked by someone else. The published cards cluster tightly: Kaplan charges 25% on claims of $3,000 to $9,999, STA International 25% on the first $5,000, IC System 35% through its small business program. One of the lowest published percentage cards is Atradius Collections at 18.5% on US claims over $2,500.

The percentage you actually pay depends on three things, in this order: the age of the debt when you place it, the size of the claim, and how many accounts you send. A business that places a steady volume of fresh claims negotiates the low end. A business that sends one old invoice pays the top. For a full breakdown of every published card, see collection agency fees and rates.

It is worth it on a customer who has stopped answering you and owes more than about $2,500. At that point the agency's letterhead, skip tracing and the credible threat of suit do something your own emails can no longer do, and paying 20% to 25% of money you would otherwise lose is a good trade.

It is not worth it on invoices that are simply late. Most B2B invoices under 90 days get paid after a firm, dated written demand, and sending that demand is not worth a quarter of the invoice. It is also not worth it below the agency's minimum, because the file is usually declined rather than repriced. The honest split is early files in a flat fee debt collection sequence, silent files with an agency. Our guide to the best collection agency for small business ranks the agencies that publish their rates by fee and minimum claim.

No collection, no fee is another name for contingency pricing: the agency charges nothing to open the file and is paid a percentage only from what it recovers. If nothing is collected, you owe nothing, apart from any costs you agreed to advance.

Three details decide whether it is really free. First, the direct payment clause: if the customer pays you instead of the agency, most contracts still owe the commission. Second, setup or file fees, such as the $75 IC System charges on its InstiCollect program. Third, suit: once a file is forwarded to an attorney, court costs are usually advanced by you and the rate rises. Read those three clauses before you sign anything labeled no collection, no fee.

On claims your customer will pay once pressed, a flat fee delivers better returns because the cost does not grow with the invoice. On a batch of ten $5,000 invoices that pay within 90 days, contingency at 25% costs $12,500. A DebtAgent Plus plan covering 250 active debtors costs $149 a month, or $447 over three months.

On claims your customer will not pay without outside pressure, contingency wins, because a flat fee sender that stops at email will not move them and an agency with skip tracing and attorney forwarding might. Per account flat fee agencies sit in between: they charge a small fixed amount at placement, typically $10 to $25 per account, for a short letter and call program. Most CFOs end up using both routes, split by the age of the file. Our debt collection software pricing comparison shows how 17 tools charge.

Many commercial collection attorneys do, usually at 30% to 50% of what they recover, and almost all of them ask you to advance court costs and filing fees. Kaplan Group's litigation cost page quotes 30% to 35% including the attorney, an initial cost advance from $1,300, and a non contingent fee of $1,000 to $2,500 or 5% of the claim in most cases.

That makes suit a tool for claims large enough to absorb those costs against a debtor who has assets and no real dispute. For invoices under about $30,000 it is usually cheaper to run a firm written sequence first. Our page on commercial collections attorney costs works the numbers on real claim sizes, and recovering unpaid invoices without legal fees covers the routes before suit.