Corporate Debt Recovery: Avoid the Most Costly Mistake
Corporate Debt Recovery: The One Mistake That Turns a Recoverable Invoice Into a Write-Off
There's a decision point in every corporate debt recovery case — a single inflection moment — where the outcome shifts from "probable recovery" to "probable loss." Most finance teams don't recognise it when it happens. Some don't even know it exists. We'll identify it precisely in this piece, because once you see it, you can't unsee it. And it changes how you handle every overdue receivable going forward.
But first, let's be clear about what corporate debt recovery actually is — and what it isn't.
What Corporate Debt Recovery Looks Like in Practice
Corporate debt recovery is the process of collecting overdue payments between businesses. Not consumer debt. Not credit card balances. This is B2B: one company owes another company money for goods delivered, services rendered, or contractual obligations fulfilled. The invoice went out. The payment didn't come back.
It sounds simple. It isn't.
Corporate debtors are not individuals struggling with personal finances. They're businesses with accounts payable departments, cash flow strategies, and — critically — their own creditors to manage. When a company delays payment, it's usually not because they forgot. It's because they're prioritising which creditors get paid first. Your job in corporate debt recovery is to move your invoice to the top of that list.
The tools for doing this fall into two phases: amicable recovery and legal enforcement. The art is knowing when to shift from one to the other.
Phase 1: Amicable Recovery — The 80% Solution
In our portfolio, roughly 80% of corporate debts that are placed with us within 6 months of the due date resolve without court involvement. That number drops to 55% at 12 months and below 30% at 18 months.
The amicable phase works not because you send a polite letter. It works because the debtor receives communication from a professional third party — in their language, from their jurisdiction, with clear knowledge of the local enforcement options — and recalculates the cost of continued non-payment.
That recalculation is the entire mechanism. Everything in the amicable phase exists to trigger it.
Formal demand. Not an email. A structured demand letter citing the applicable commercial code, the exact interest accrual rate, and the specific next step if payment isn't received. In Germany, this means referencing the BGB (Bürgerliches Gesetzbuch). In France, the Code de Commerce. In the UAE, the relevant Federal Decree-Law. The legal citation signals expertise. The deadline creates urgency.
Direct contact. Phone calls — in the debtor's language — within the first week. This is where skill matters. A good collector establishes three things in the first call: whether the debt is disputed, whether the debtor has the capacity to pay, and what payment arrangement is realistic. Those three data points determine everything that follows.
Escalation signals. If initial contact doesn't produce a commitment, the collector escalates the communication — cc'ing the debtor's management, referencing the next procedural step, providing the court filing timeline. Each escalation raises the debtor's internal cost of ignoring the claim.
The goal isn't intimidation. It's information asymmetry. The debtor needs to understand that you know exactly how to enforce, exactly what it will cost them, and exactly how quickly it will happen.
The Inflection Point: Days 45-75
Here's that decision point we mentioned at the top.
Between days 45 and 75 after a corporate invoice becomes overdue, a specific shift happens in the debtor's behaviour. Before day 45, the non-payment is usually operational — processing delays, internal approvals, cash flow timing. The debtor still intends to pay. After day 75, the non-payment has become strategic. The debtor has mentally reclassified your invoice from "pending" to "manageable risk." They've calculated that you probably won't sue, that the cost of continued delay is low, and that other creditors are louder.
This window — days 45 to 75 — is the inflection point. It's when escalation from internal follow-up to professional collection has the highest return on investment. Not because the legal tools are different. Because the debtor's psychology is different. They haven't yet committed to non-payment as a strategy. They can still be redirected with professional pressure.
Miss this window and you're not chasing a late payment. You're negotiating with a debtor who has decided not to pay you.
The companies that recover corporate debt consistently aren't more aggressive. They're more punctual. They escalate at 60 days, not 12 months. That timing difference alone accounts for more recovery variance than any other single factor in our 25 years of data.
Phase 2: Legal Enforcement — When Amicable Isn't Enough
Some corporate debts require court involvement. A debtor in formal dispute. A company entering restructuring. A jurisdiction where amicable leverage is limited. This isn't a failure of the collection process — it's the next designed step.
Legal enforcement in corporate debt recovery varies dramatically by jurisdiction:
Payment order procedures (Germany's Mahnverfahren, Italy's Decreto Ingiuntivo, Spain's Monitorio) are the fastest track. They work for documented, undisputed claims. The judge reviews your evidence without hearing the debtor. Timeline: 2-8 weeks depending on jurisdiction. These are your first choice for straightforward corporate claims.
Ordinary proceedings are required when the debtor formally disputes the debt — either the amount, the quality of goods, or the contractual terms. Timeline: 6-36 months, depending heavily on jurisdiction. Milan processes faster than Naples. Frankfurt faster than Berlin. London's Commercial Court faster than general Queen's Bench proceedings.
Enforcement — actually collecting the money after you have a judgment — is its own process. Asset seizure, bank account attachment, wage garnishment (in jurisdictions where it applies to corporate officers), and insolvency petitions are all tools. The right choice depends on the debtor's asset structure and the enforcement mechanisms available locally.
The cost of legal action is the question every CFO asks. The honest answer: it depends entirely on jurisdiction and claim complexity. Court fees for a German Mahnverfahren start at €36. Italian Decreto Ingiuntivo fees scale from €98 to €2,587. A full commercial lawsuit in London can cost £10,000-£50,000+ in legal fees before you see a courtroom. This is exactly why a good recovery agency advises you before you spend — sometimes the honest recommendation is "don't litigate."
Preserving the Relationship (When It's Worth Preserving)
Not every debtor is a bad actor. Cash flow constraints, internal disputes, leadership changes, and operational disruptions all cause delayed payments in businesses that fully intend to pay. The CFO's dilemma in corporate debt recovery is real: you need the money, but you might also need the customer.
Professional recovery handles this better than in-house follow-up, for a counterintuitive reason. When a third party contacts the debtor, it depersonalises the demand. The debtor isn't being chased by their account manager or their sales contact — they're dealing with a professional collector who has no relationship to protect. Paradoxically, this makes the conversation easier for both sides. The debtor can negotiate a payment plan without losing face. The creditor can maintain the commercial relationship because they weren't the ones making the call.
In roughly 30% of our corporate recovery cases, the creditor and debtor continue doing business after the debt is resolved. That's not in spite of using a collection agency. It's because of it.
What You Should Do With Your Aging Receivables
If you've read this far, you probably have corporate invoices sitting at 60, 90, or 120+ days overdue. You already know the internal follow-ups aren't working. You might be telling yourself there's still time, that the relationship will sort it out, that legal action is too expensive or too aggressive.
Here's what 25 years of corporate debt recovery has taught us: the invoices you're most worried about damaging the relationship on are usually the ones where the relationship is already damaged — by the debtor's non-payment. Acting professionally and promptly isn't aggressive. It's the response your debtor expects from a company that takes its own financial health seriously.
We recover corporate debt on a contingency basis across 40+ countries. No recovery, no fee. The initial case assessment takes 48 hours and costs nothing.
