Debt Recovery Collection Services: A CFO Procurement Guide

No-winNo-fee contingency model — agency paid on recovery only

10–25%Contingency fee range — sliding by claim age and size

€40+ECBEU Late Payment Dir. 2011/7/EU — automatic B2B rights

What Debt Recovery Collection Services Actually Are

No-winNo-fee contingencyAgency paid on recovery only — commission-based

10–25%Fee on collected amountSliding by age and claim size

€40Fixed recovery costPer invoice — EU Directive 2011/7/EU

ECB+8ppStatutory interestAuto from due date EU/UK — no demand needed

Trust acc.Client money ring-fencedRegulatory requirement for licensed agencies

Service delivery

1

File intake and mandate

Review invoice, contract, delivery proof. Identify governing law, jurisdiction, limitation period — the three determinants of strategy. Sign placement mandate (scope, commission, disbursements). Agency opens case file and assigns dedicated manager. No-cure-no-pay commitment for amicable phase in writing.

2

Formal demand in debtor’s language

Drafted in debtor’s local language via the correct channel: LRAR (FR), PEC (IT), Registered post (DE/AT), Burofax (ES), Cert. letter (UK). Invokes statutory interest (ECB+8pp Dir.2011/7/EU) + €40 fixed cost per invoice. Sets deadline: 7–14 days. Parallel: KYB enquiry (corporate registry, insolvency check, asset profile).

3

Escalation: amicable → pre-legal → judicial

Amicable phase resolves 65–80 % of fresh commercial claims (<90 days) without court. Pre-legal: payment order procedure (Mahnverfahren, decreto ingiuntivo, processo monitorio, EU EPO, UAE Art.62). Judicial: civil litigation or ICC/LCIA arbitration. Each stage costs are pre-disclosed in mandate. Disbursements (filing fees, translation, bailiff) are pass-through.

The creditor retains ownership of the receivable. The agency acts as authorised agent under a written placement mandate, on a contingency basis, and remits the collected sum minus its fee once payment clears the agency trust account. EU Late Payment Directive 2011/7/EU grants €40 fixed recovery compensation per invoice plus ECB+8pp statutory interest — automatically, from the due date, without any demand.

Choosing a debt recovery collection services provider

CriterionWhat to look forPriority

Licensing in operating jurisdictions

Mandatory

RDG (DE), WKI (NL), DFPI (CA), Questura §115 (IT), DCWP (NYC). No licence = no action.

Critical

Named local correspondents

Not generic “global network”

Named firms in debtor’s country. Ask for list. Verify independently.

High

No-cure-no-pay in writing

Written mandate clause

Commission on recovered amount only. Disbursements (filing, translation) separate pass-through.

Critical

PI insurance coverage

EUR 500K–2M standard

Professional indemnity. Covers negligence, errors in handling client funds.

High

Segregated client trust account

Regulatory requirement

Client funds ring-fenced from agency operating funds. Standard in licensed jurisdictions.

Critical

What are debt recovery collection services?

Debt recovery collection services are professional third-party engagements where a specialist firm pursues unpaid commercial invoices on a contingency basis (10–25%). EU Directive 2011/7/EU grants creditors €40 per invoice + ECB+8pp interest automatically. Verify: licensing, named local correspondents, written no-cure-no-pay, PI insurance, segregated trust account.