B2B Debt Collection: The Process From Invoice to Recovery
B2B Debt Collection: From Ignored Invoice to Recovered Cash
What B2B Debt Collection Actually Is
B2B debt collection is the process of recovering money that one business owes another. It's distinct from consumer collection in every meaningful way — the legal framework, the approach, the tools, and the psychology. When your debtor is a business, you're dealing with a financial decision-maker who is strategically managing cash flow, not an individual in distress.
This distinction shapes the entire collection approach. Consumer collection is regulated, restricted, and designed to protect vulnerable individuals. B2B collection is commercial, flexible, and designed to produce payment between entities with roughly equal bargaining power.
The B2B Collection Process
Stage 1 — Internal credit management (Days 1-45). Your AR team handles initial follow-up: payment reminders, phone calls, statement reconciliation. The goal isn't collection — it's confirming that the invoice is acknowledged, identifying any disputes, and obtaining a payment commitment. If you have a commitment by day 30, monitor it. If you don't, prepare for escalation.
Stage 2 — Formal demand (Days 45-60). A formal demand letter — not a friendly reminder — citing the contract, outstanding amount with accrued interest, and a specific deadline. State that the matter will be referred to a professional collection agency if unresolved. This letter creates the legal foundation for everything that follows.
Stage 3 — Professional collection (Days 60-90). Engage a B2B collection agency with presence in the debtor's jurisdiction. The agency contacts the debtor, assesses their financial position, and negotiates resolution. The third-party signal changes the debtor's calculation: the creditor has invested in recovery and is prepared to escalate further.
Stage 4 — Legal escalation (Days 90+). If amicable efforts fail, the agency recommends jurisdiction-specific legal action. Payment orders (Mahnverfahren, injonction de payer, decreto ingiuntivo), statutory demands (UK), or court proceedings. Each path has specific costs, timelines, and success probabilities that should be evaluated before filing.
Why Most B2B Collection Fails
Too late. The average business refers a claim to a collection agency at 6-9 months past due. By then, recovery probability has dropped to 40-50%. The optimal referral point is 60-75 days.
Wrong agency. Consumer collection agencies handling B2B claims apply consumer tactics — scripted calls, form letters, no legal escalation capability. B2B collection requires commercial expertise, jurisdictional knowledge, and the ability to credibly threaten (and execute) legal proceedings.
No documentation. A verbal agreement, a handshake deal, an email chain with vague terms — these are not collection-ready claims. B2B collection starts with documentation: signed contracts, purchase orders, delivery confirmations, and formal invoices with proof of receipt.
The Economics
Contingency fees for B2B collection run 10-25% depending on jurisdiction, claim age, and amount. No recovery, no fee. The math favours professional collection for any claim where your internal process hasn't produced payment by day 60 — because the agency's 20% fee on a recovered claim costs less than the 3-4% monthly decline in recovery probability from continued inaction.
B2B debt collection isn't complicated. It's documentation, timing, and jurisdictional competence — applied consistently and escalated without hesitation.
