Small Business Debt Collection Agencies: What Gets Results
Small Business Debt Collection Agencies: What Actually Gets Results
What Separates Effective Agencies
Not all collection agencies produce the same results for small business clients. The agencies that deliver consistent recovery share specific characteristics: they specialise in commercial claims (not consumer debt), they have litigation capability (not just letter-writing), and they understand the economics of small business claims (where a $15,000 invoice represents a significant portion of the creditor's revenue).
The most important differentiator: escalation capability. An agency that can only send demand letters and make phone calls has one tool. An agency that can escalate to court filings, obtain judgments, and execute enforcement has a credible threat behind every demand. Debtors — and their attorneys — know the difference.
Recovery Benchmarks
Claims placed within 90 days: 60-70% recovery rate. This is the sweet spot — the debtor is still in business, still has the relationship context, and the documentation is fresh.
Claims at 6 months: 45-55%. The debtor has likely deprioritised the payment. Recovery requires more persistent follow-up and clearer escalation signals.
Claims at 12+ months: 25-35%. At this stage, the agency needs investigative capability (skip tracing, asset searches) and willingness to litigate.
If your agency isn't achieving these benchmarks, the agency — not the debtor — may be the problem.
What to Demand from Your Agency
Transparency. Regular status reports (weekly for active claims, monthly for portfolio summaries). You should know what actions the agency has taken, what responses the debtor has given, and what the next step is — without having to ask.
Speed. First demand letter within 48 hours of claim placement. First phone contact within one week. Escalation recommendation within 60 days if amicable efforts haven't produced results.
Honesty. If the claim isn't collectable — debtor is insolvent, bankrupt, or dissolved — the agency should tell you promptly rather than keeping the claim on file indefinitely. Time spent on uncollectable claims is time not spent on viable ones.
Fee Structure
Contingency only: 15-25% for fresh commercial claims, higher for aged claims. No upfront fees, no monthly charges, no hidden costs. Legal phase costs (court fees, service of process) should be pre-approved and itemised.
Red flags: Agencies that charge upfront fees, require long-term contracts, or can't provide references from small business clients in your industry.
Small business debt collection agencies that deliver results combine commercial specialisation, litigation capability, transparent reporting, and contingency pricing. The agency should feel like an extension of your accounts receivable team — not an additional cost centre.
