How to Collect a Debt From a Company: The Practical Playbook
How to Collect a Debt From a Company: What Actually Works
The Situation You're In
A company owes you money. You've sent invoices, follow-up emails, and maybe made a few phone calls. The responses have been vague — "we're processing it," "there's been a delay," "we'll sort it out next month." Each month, the same conversation. No payment.
You're past the point where polite reminders will work. The question isn't whether to escalate — it's how to escalate effectively without wasting more time and money.
Step 1: Verify Your Position
Before pursuing collection, confirm three things. Is the debt documented? Signed contract, purchase order, delivery confirmation, invoice with proof of receipt. Without documentation, you have a conversation, not a claim. Is the debtor solvent? Check the company's filing status with the relevant commercial register. If they've entered insolvency proceedings, your collection strategy changes entirely. Is the limitation period still open? Every jurisdiction has a deadline. Miss it, and your claim becomes unenforceable regardless of its merits.
Step 2: Send a Formal Demand
Not another reminder. A formal demand letter — in the debtor's language, citing the specific contract, the outstanding amount with accrued interest, and a deadline (14 days is standard). State explicitly that failure to pay will result in referral to a professional collection agency and potential legal proceedings. Send by registered post with proof of delivery.
This letter serves two purposes: it creates a legal record of the demand (required in many jurisdictions before court proceedings), and it signals to the debtor that you've moved from administrative follow-up to active recovery.
Step 3: Engage Professional Collection
If the formal demand doesn't produce payment within 14 days, engage a professional B2B collection agency. Choose one with presence in the debtor's jurisdiction — not just a mailing address, but local staff who speak the language and know the legal system.
Contingency-based agencies (no recovery, no fee) align incentives: they only earn when you do. Standard fees: 10-25% depending on claim age and jurisdiction. The agency handles debtor communication, negotiation, and escalation recommendations.
Step 4: Escalate Legally If Necessary
Most commercial debts resolve during amicable collection (50-70%). For the remainder, legal escalation follows jurisdiction-specific paths. In the EU: European Payment Order for cross-border claims, or domestic payment order procedures (Mahnverfahren in Germany, injonction de payer in France, decreto ingiuntivo in Italy). In the US: state court proceedings based on the debtor's location.
Your collection agency should provide a cost-benefit analysis before recommending litigation — including estimated court costs, legal fees, timeline, and realistic recovery probability.
What Not to Do
Don't keep sending emails. After three unanswered follow-ups, email number four communicates weakness, not persistence. Don't threaten without acting. A threat to "take legal action" that never materialises teaches the debtor that your threats are empty. Don't wait for the perfect moment. The data on collection timing is unambiguous: earlier is always better. Always.
