Debt Collection Best Practices: The 60-Day Framework
Debt Collection Best Practices: Everything You've Been Told Is Consumer Advice (Here's What Works for B2B)
Search for “debt collection best practices” and you'll find the same advice repeated across a hundred websites: maintain professional communication, document everything, know the regulations, use empathy.
All fine. All consumer-focused. And almost entirely useless for business-to-business debt collection.
The frame shift: B2B debt collection operates under fundamentally different rules, psychology, and economics than consumer collection. The debtor isn't an individual who lost a job — they're a company making a strategic decision about which creditors to pay first. The regulations are different (the FDCPA doesn't apply to commercial debt in the US, and EU consumer protection directives don't cover B2B transactions). The amounts are different. The leverage is different. And the best practices are different.
Here's what actually works when one business owes another business money.
Best Practice 1: The 60-Day Rule
The single most impactful practice in B2B debt collection is also the simplest: escalate to professional collection within 60 days of the due date.
Not 90 days. Not 6 months. Sixty days.
The data is unambiguous. Commercial debts pursued within 60 days of the due date recover at approximately 90-94%. At 90 days, that drops to 74%. At 6 months, 58%. At 12 months, 25-30%.
Most companies wait too long because they don't want to damage the relationship, because they're hoping the debtor will pay voluntarily, or because they haven't established a clear escalation policy. Every week of delay reduces the expected recovery value.
The 60-day rule doesn't mean litigation at 60 days. It means engaging a professional collection service that can send a formal demand, investigate the debtor's situation, and begin structured follow-up. The mere fact of professional engagement resolves the majority of claims.
Best Practice 2: Separate the Relationship from the Receivable
The most common mistake in B2B collection is conflating the commercial relationship with the payment obligation. Sales teams say “don't chase them, they're a big account.” Management says “we need that client for next quarter.”
This conflation is exactly what a strategic debtor exploits. They know you're reluctant to escalate. They know your sales team is protecting the relationship. They're using your own organisational dynamics against you.
The best practice: assign receivables management to a function that isn't incentivised to protect the relationship. This could be a dedicated credit management team, a CFO-level escalation process, or an external collection partner. The person deciding whether to escalate should not be the same person whose bonus depends on next quarter's sales to that client.
This doesn't mean being aggressive or burning bridges. Professional collection agencies maintain diplomatic communication precisely because B2B relationships matter. But the decision to pursue a debt should be based on the debt's economics, not on the sales pipeline.
Best Practice 3: Document Like a German
German companies win debt collection cases at higher rates than most European counterparts. Not because German courts are biased toward creditors — because German companies maintain better documentation.
The documentation hierarchy for B2B debt collection:
Essential (without these, you may not have a case): Signed contract or accepted purchase order. Proof of delivery or service completion (delivery notes, sign-off documents, completion certificates). The original invoice(s) with clear payment terms. Evidence of the formal demand (registered mail receipt, burofax confirmation, etc.).
Valuable (strengthens your position significantly): Email correspondence confirming the order, delivery, or debtor's acknowledgment of the debt. Records of partial payments (these constitute implicit acknowledgment). Credit application or trade reference documents signed by the debtor. Written payment promises or rescheduling agreements.
Often overlooked (can make or break cross-border cases): Proof that the contract specifies governing law and jurisdiction. Interest rate provisions or reference to applicable statutory interest. Attorney fee allocation clauses. UCC security interest filings (US) or retention of title clauses (EU).
Document everything from the beginning. The time to build your evidence file is when the contract is signed, not when the debtor stops paying.
Best Practice 4: Know the Debtor's Calculation
A consumer debtor often can't pay. A commercial debtor often can pay — they're choosing not to, or choosing to pay other creditors first.
Understanding the debtor's decision calculus is the most underrated skill in B2B collection. The debtor is asking themselves: “What happens if I don't pay this creditor?” If the answer is “nothing” — no credit bureau report, no legal action, no supply disruption — they'll deprioritise your invoice. “Can this creditor actually enforce?” If you're a foreign company without local legal representation, the debtor may calculate that enforcement is impractical. Demonstrating local capability (through a local agent) changes this calculation. “How does paying this compare to my other obligations?” Debtors with limited cash pay secured creditors first, then creditors who can disrupt operations, then creditors who can damage their credit, then everyone else. Where you fall in this hierarchy determines when you get paid.
The best practice: change the debtor's calculation. Engage local representation to demonstrate enforcement capability. Report to credit bureaus where possible. Use the specific legal mechanism (payment order, statutory demand) that creates the most direct consequence for non-payment in the debtor's jurisdiction.
Best Practice 5: Match the Mechanism to the Jurisdiction
There is no universal collection process. Each jurisdiction has specific legal mechanisms that work for commercial debts:
Germany: Mahnverfahren (judicial dunning) — automated, costs ~€36, produces enforceable title in 6-8 weeks without court appearance.
France: Injonction de payer or référé provision (emergency procedure) — the latter can produce a provisional payment order in 2-4 weeks.
Spain: Proceso monitorio — no cap on claim value, 20-day debtor response period, streamlined digital filing.
Italy: Decreto ingiuntivo — ex parte order issued in 15-40 days based on documentation alone.
UK: Statutory demand (for debts over £750) — if unpaid within 21 days, the creditor can petition for the debtor's insolvency. This is the nuclear option, but the threat is highly effective.
USA: Varies by state. UCC liens, confession of judgment clauses (where available), and state-specific small claims procedures all have tactical applications.
Knowing which mechanism to deploy — and when — is the difference between a collection process and a collection strategy.
Best Practice 6: Set the Terms Before the Invoice
The best time to establish collection leverage is before the first sale, not after the first default.
Contract terms that dramatically improve your collection position: a jurisdiction clause specifying which country's courts will hear disputes; a governing law clause specifying which country's law applies; an interest clause specifying the rate and when it accrues; an attorney fee clause (critical in the US where the losing party doesn't automatically bear legal costs); and a retention of title clause (in the EU, a properly drafted clause means the goods remain your property until paid for).
These clauses cost nothing to include and can save tens of thousands in collection costs.
The Meta-Practice
Every best practice above derives from a single principle: treat B2B debt collection as a business process, not as a crisis response.
The companies that recover the most money have clear policies, defined escalation timelines, documented contracts, and established collection relationships. They don't wait for a crisis to think about collection. They built the system before the first invoice was issued.
The ones that recover the least are the ones still hoping the debtor will pay voluntarily. Hope is not a collection strategy.
