Debt Collection Made Easy: Getting Your Money Back from Companies

Why Knowing How to Collect a Debt from a Company Matters

How to collect a debt from a company quickly:

1. Gather documentation: invoices, agreements, communication history.
2. Communicate clearly and professionally via phone or email.
3. Send a formal demand letter specifying payment terms and deadlines.
4. Negotiate payment plans if needed to preserve the business relationship.
5. Escalate to a debt collection agency or take legal action if necessary.

Small business owners face plenty of challenges already without adding unpaid invoices into the mix. When a company owes you money, it doesn't just hurt your cash flow—it can threaten your entire business. Overdue payments slow your ability to operate, pay expenses, and reinvest in growth. But the good news is, debt collection doesn't have to be complicated or damage your relationships.

I'm Kevin Simon, and for over 20 years, I've successfully steerd complex financial disputes worldwide, helping clients understand how to collect a debt from a company efficiently while preserving critical business connections. In this guide, I'll share simple, practical steps you can take to reclaim your cash flow.

Understanding Business Debt Collection

Business debt collection is simply the process of getting paid the money another company owes you. When you provide products or services, you expect timely payment—after all, you've earned it. But if that payment gets delayed, you’re suddenly dealing with business debt. This type of debt is different from consumer debt in a couple of key ways. Usually, it involves larger sums of money, and the legal guidelines for collecting it can vary quite a bit.

At Cosmopolite Debt Collection Agency, we've seen how unpaid invoices can quickly snowball into bigger problems. Overdue debts can cause cash flow headaches, slow down inventory turnover, and even damage your business’s credit rating and reputation.

Typically, debt collection kicks off once an invoice goes past its due date. Most businesses offer payment terms of around 30 days, but once an invoice hits the 60-day mark unpaid, it's often considered a "bad debt." The longer an invoice stays overdue, the harder it becomes to collect. In other words, knowing how to collect a debt from a company—and taking action quickly—is crucial to protecting your bottom line.

There are some important legal considerations when it comes to business debt collection. For example, you might have heard of the Fair Debt Collection Practices Act (FDCPA). While the FDCPA mainly covers consumer debts (like unpaid credit card bills or personal loans), its principles can still serve as valuable guidelines for any debt collection process.

The Importance of Timely Debt Recovery

Let's face it: cash flow is the heartbeat of your company. Every late payment doesn't just sit quietly on your books—it can set off a chain reaction, causing bigger headaches down the road.

When your customers delay payments, you might find yourself struggling to pay your own suppliers on time. This can damage your relationships, limit your ability to restock inventory, and prevent you from seizing future growth opportunities. In some cases, it might even hurt your credit score if you can't meet your financial obligations promptly. Suddenly, you might have to consider costly short-term loans just to bridge the gap.

In fact, industry statistics tell us a worrying story: in 2025, approximately 52% of businesses reported facing late payment issues. What's worse, debts overdue for more than 90 days have only about a 30% chance of ever being fully recovered. As debt collection expert Dean Kaplan puts it, "The chances of collecting on an invoice due from a company that has ceased operating are very slim." In reality, more than 95% of invoices turned over to collection agencies after long delays remain unpaid because the debtor's business no longer exists.

The takeaway? If you want your money back, you need to act quickly and decisively.

Your Rights and Obligations

Even though business-to-business debts aren't strictly governed by the FDCPA, it still pays to follow ethical and legal best practices. Not only will this protect your reputation, but it can also shield you from potential legal issues down the road.

At Cosmopolite Debt Collection Agency, we recommend keeping a few core principles in mind. First, always avoid harassment. Threatening language or excessive calls won't do you any favors. Instead, maintain accuracy and clarity when discussing debts—be transparent about how much is owed and what consequences could occur from non-payment.

Respecting privacy is another essential rule. Don't share debt details with third parties who don't need to know. And always treat everyone fairly, regardless of race, gender, religion, or any other factor.

Finally, follow proper legal procedures—keep good records, provide clear notifications, and file documents correctly if you need to escalate matters further. Violating these guidelines can hurt your reputation and even land you in legal trouble.

At Cosmopolite Debt Collection Agency, we take pride in adhering strictly to these ethical standards. Our goal is always to maximize your recovery while preserving your relationships and your reputation.

How to Collect a Debt from a Company

Collecting overdue payments from another company can feel awkward, but it doesn't have to be stressful or uncomfortable. A clear, structured approach makes the process simpler and significantly boosts your chances of being paid promptly. Let's walk through exactly how to collect a debt from a company, step by step.

Step 1: Gather Necessary Documentation

Before you initiate contact, do your homework—this means getting all paperwork in order. Thorough documentation is the foundation of a successful debt recovery effort and is crucial if things escalate legally.

Start by pulling together your signed contracts or agreements. These documents define the payment terms and clearly establish the debtor's obligations. Next, collect all outstanding invoices, ensuring they clearly state dates, amounts owed, and services or products you've provided. It's also helpful to keep proof of delivery for any goods or confirmation of completed services on hand.

Don't stop there—organize your payment history to show any past payments (even partial ones). Finally, round it out with any communication records, such as email exchanges or notes from phone calls discussing the invoice.

Here’s a quick cautionary tale from a real Cosmopolite Debt Collection Agency client: we once had a business owner who struggled to recover a €45,000 debt. We finded that their contract didn't clearly specify payment due dates, allowing the debtor to exploit this ambiguity. Avoid making the same mistake by ensuring your documents explicitly cover payment terms.

If you'd like more information on the documentation process, take a look at our helpful guide on steps a collection agency can use to collect a debt.

Step 2: Communicate Professionally with the Debtor Company

Once you've got your paperwork buttoned up, it's time to reach out. A quick, respectful phone call often clears things up faster than you might think. According to our experience at Cosmopolite Debt Collection Agency, directly speaking with the debtor is often the most effective method to resolve unpaid invoices.

Keep your conversations calm, professional, and positive—remember, you're aiming to solve a mutual business problem, not start an argument! Politely ask to speak with the person responsible for accounts payable or financial decisions. Then verify key details—like the invoice number, the amount owed, and when it was due. Don't be vague; instead, clearly ask, "When can we expect payment?" Specific questions yield better results than passive ones.

Remember to document each call: record the date, time, who you spoke with, and what was discussed. This will help if you need to refer back to the conversation later.

Often, delays occur due to simple misunderstandings or administrative errors. Maybe the invoice was sent to the wrong department, or perhaps there's a short-term cash flow hiccup. Resolving these small issues early with clear, professional communication can speed up your debt recovery significantly.

Step 3: Send a Formal Demand Letter

If your initial efforts don’t prompt payment, the next step is sending a formal demand letter. This letter acts as an official, documented request for payment—an important tool if you have to escalate things later.

A good demand letter clearly states who you are (company name and contact details), who owes you (debtor company's details), and precisely how much they owe (invoice number, amounts, and dates). Include details about past partial payments, if applicable. Clearly state that you are officially demanding payment and set a firm deadline—usually 7-14 days from receipt is common.

It's equally important to outline what happens if they fail to pay by your stated deadline, such as bringing in a collection agency or pursuing legal action. Make sure payment methods—like bank transfer details or online payment links—are easy to understand.

Send the demand letter by certified mail (with return receipt requested) to ensure you have proof the debtor received it. At Cosmopolite Debt Collection Agency, we find around 45% of debtors promptly respond when they receive a professionally-written demand letter, often because it clearly signals the seriousness of your intent.

For more tips on crafting a strong letter, visit our article on effective debt recovery strategies.

Step 4: Negotiate Payment Arrangements

Sometimes, despite a debtor's good intentions, financial difficulty prevents immediate payment. In these cases, flexibility can truly pay off—literally! Negotiating a manageable payment plan helps preserve valuable business relationships and ensures you eventually get paid.

You could offer to split the debt into reasonable monthly installments, or perhaps accept a slightly reduced lump-sum payment if paid quickly. Another option is agreeing to extended payment terms with added interest. Or, consider mixing these approaches—for instance, a partial upfront payment followed by installments.

Whichever arrangement you choose, make sure it's clearly documented in writing. Signatures from both parties, specific payment amounts, due dates, and clearly-stated consequences for missed payments are essential.

Take this example from one of our clients—a software development firm in Miami. They were owed $78,000 by a long-standing customer facing short-term cash issues. Rather than immediately taking legal action, we helped them agree on a six-month installment plan. Both businesses benefited: our client received all their money, and the debtor company appreciated the understanding approach, maintaining a valuable relationship.

Learning how to collect a debt from a company effectively means balancing firmness with empathy. After all, today's debtor may still be tomorrow's client.

Escalating the Debt Collection Process

Sometimes a friendly reminder and professional communication just aren't enough. When your invoices remain unpaid despite your best efforts, it's time to turn up the heat. Don't worry – escalating doesn't mean burning bridges. It simply means recognizing when a situation requires stronger measures to protect your business interests.

Hiring a Debt Collection Agency

After chasing payments for months, the emotional toll can be draining. This is where professional help comes in handy. At Cosmopolite Debt Collection Agency, we often start working with clients whose invoices have gone 90 days past due – though honestly, the earlier you reach out, the better your chances of recovery.

Think of a collection agency as your financial bodyguard. We bring specialized expertise that most businesses simply don't have in-house. When a debtor receives communication from a third-party collection agency, something interesting happens psychologically – suddenly, the debt feels more serious. In fact, many companies prioritize paying debts that have been escalated to collections.

"The day we hired Cosmopolite was the day our cash flow problems began to turn around," one client told us after we recovered a series of longstanding debts that had been plaguing their business for over a year.

Most agencies, including ours, work on contingency – meaning we only get paid when you get paid. Our fees typically range between 25-50% of recovered amounts, depending on the age and complexity of your debt. With offices spanning from Miami to London, Paris, Madrid, Istanbul, Bangkok, Dubai and throughout Europe, we've built a global network that allows us to effectively pursue debtors no matter where they try to hide.

You can learn more about our specific Debt Collection Services on our website.

Initiating Legal Action

When collection calls and letters don't do the trick, legal action might be your next best option for how to collect a debt from a company. The courts provide a formal mechanism to not just establish the validity of your claim, but also enforce payment.

For smaller debts – typically under $10,000, though this varies by location – small claims court offers a relatively straightforward process. You'll file paperwork, pay a modest fee, and often represent yourself without needing an attorney. About 60% of small claims filings come from small businesses trying to recover what they're owed, so you'll be in good company.

For larger debts, civil litigation becomes necessary. This is a more formal process involving filing a complaint, serving papers to the debtor, exchanging information during findy, and potentially attending hearings or trial. While more complex and typically requiring legal representation, the potential recovery makes it worthwhile for substantial debts.

The real work often begins after you win your case. As one legal expert bluntly told me, "Winning a lawsuit gets you a piece of paper. Turning that paper into actual money is a whole different battle." That piece of paper – a judgment – gives you legal tools to pursue payment through:

Bank levies that freeze and seize funds from the debtor's accounts, wage garnishments taking a portion of employee wages, property liens placing legal claims against assets, till taps collecting cash directly from retail businesses, and debtor examinations forcing disclosure of financial information.

At Cosmopolite, we maintain relationships with legal partners across all our jurisdictions, helping to guide clients through these proceedings when necessary.

Dealing with a Debtor Company That Has Closed or Declared Bankruptcy

Finding out your debtor has closed shop or filed for bankruptcy can feel like a punch to the gut. Your options narrow considerably, but you're not completely out of luck.

In bankruptcy cases, creditors get paid according to a strict hierarchy. Secured creditors (those with collateral) get first dibs, followed by priority unsecured creditors (like tax authorities and employees owed wages), then general unsecured creditors (most business debts), and finally equity holders. If you're in that third group – as most business creditors are – recovery can be limited.

Dean Kaplan, a respected voice in collections, puts it bluntly: "The chances of collecting on an invoice due from a company that has ceased operating are very slim." Our experience confirms this – in over 95% of cases where invoices are turned over after a company has closed, the debt remains uncollected.

But what about when a company closes without formal bankruptcy? You still have some cards to play:

Personal guarantees can be your saving grace. If business owners personally guaranteed the debt, you can pursue them directly. Business assets might still exist somewhere – tracking them down could lead to recovery. Sometimes companies perform a phoenix maneuver – closing down and reopening under a new name to dodge debts. This can be fraudulent and potentially actionable. If the company was sold or merged, the buyer may have assumed liabilities as part of the deal.

The key takeaway? Time is truly of the essence when it comes to how to collect a debt from a company. The moment you sense trouble – missed payments, bounced checks, avoiding communication – is the moment to take action. The longer you wait, the more likely you'll find yourself chasing ghosts.

International Business Debt Collection

Collecting debt from a local business can be tough enough—but when it's a company in another country, things get even trickier. International debt collection involves navigating different legal systems, language barriers, and cultural norms. Thankfully, with the right knowledge (and maybe a bit of patience), you can learn how to collect a debt from a company across borders without losing your cool—or your cash.

Navigating Legal Differences Between Countries

A challenge with international debt collection is understanding the legal landscape of your debtor's country. Different countries have different rules, and those rules can significantly shape your strategy.

For starters, jurisdiction is a biggie—this determines which country's laws apply to your situation. For example, if your contract specifies your home country's jurisdiction, enforcing that abroad can still be complicated. And even if you obtain a judgment in your own country, enforcement abroad might require additional steps.

Another important consideration is the statute of limitations—how long you have to legally pursue a debt. This varies widely from place to place. While you typically have six years in the UK, in Germany it's only three years, and in France it's five. Knowing these differences helps you avoid missing critical deadlines.

Documentation rules differ too. You'll need to know exactly what's considered valid proof of debt in the debtor's country. The clearer your documentation, the stronger your position will be if you have to escalate the matter legally.

And let's not forget what's permitted when it comes to collection practices. Some approaches that are perfectly acceptable in one country may be strictly off-limits elsewhere. For example, the U.S. tends to have fewer restrictions on collection communications, while European countries can be stricter, placing more emphasis on privacy and respectful outreach.

At Cosmopolite Debt Collection Agency, we've seen how important local knowledge is. We recently helped a London-based tech firm recover €125,000 owed by a company in Spain. Understanding Madrid's specific legal procedures made all the difference between chasing the money endlessly and actually getting paid.

Want to dive deeper into international debt collection strategies? Check out our detailed guide on how to collect an international debt.

Working with International Debt Collection Agencies

Here's the good news: you don't have to figure out all these international nuances alone. Specialized international debt collection agencies have the expertise, resources, and connections to help you steer cross-border debts effectively.

These agencies bring valuable local knowledge about specific laws, regulations, and processes in the debtor's country. They speak the local language—which, trust me, goes a long way in effective negotiations. Plus, they’re culturally savvy, ensuring your collection efforts are respectful and effective, rather than accidentally offensive.

International agencies also have established networks—including local attorneys, courts, and enforcement authorities—making the legal process smoother and more efficient. And when payments do come through, they streamline dealing with multiple currencies and international banking.

At Cosmopolite Debt Collection Agency, we’ve got offices and trusted partners in major cities worldwide, including Paris, London, Madrid, Istanbul, Bangkok, Dubai, and throughout North America and the UK. This global footprint helps us chase down debts wherever they originate.

One memorable example: a Turkish manufacturing client approached us after months of unsuccessful attempts to collect a $230,000 debt from their Canadian distributor. Our Toronto-based team stepped in, leveraged their local presence and expertise, and negotiated a favorable settlement within just 45 days—successfully recovering 85% of the outstanding debt.

When it comes to international debt collection, you don't need to feel overwhelmed. With the right partners and a bit of global know-how, you can turn unpaid international receivables back into revenue—no passport required.

Preventing Future Debt Collection Issues

Here's a little secret—when it comes to how to collect a debt from a company, the best strategy is not having to chase payments in the first place. By setting clear expectations upfront and taking a proactive approach, you can minimize future collection headaches. Let's walk through some practical steps you can take to keep your cash flowing smoothly.

Implementing Effective Credit Policies

A solid credit policy is your first line of defense against unpaid invoices. Think of it as a safety net—one that helps you spot high-risk accounts before they have a chance to trip you up.

Start by conducting simple credit checks on new customers. Look into their payment histories and overall financial health. It doesn't take long, and knowing your customer's track record can save you from future trouble.

Next, set clear, realistic credit limits based on the customer's financial stability and your comfort level. Don't be shy about asking for a deposit upfront from new customers or those with less-than-perfect credit histories. It’s not just good practice—it's smart business.

But don't stop there. Regularly review credit terms and adjust limits based on your customers' payment behavior. If someone consistently pays late, it might be time to tighten their credit limit or renegotiate terms. And make sure you're managing your accounts receivable closely—quickly spotting overdue payments means you can act early, before small problems become big headaches.

We've seen how powerful this approach is. One of our clients, a wholesale distributor based in Paris, managed to reduce their bad debt by an impressive 67% after implementing our recommended credit policy framework. By identifying risky accounts early, they could tailor payment terms that protected their business without damaging important relationships.

Establishing Clear Payment Terms and Contracts

When it comes to invoices, clarity is king. The more specific your payment terms and contracts are, the fewer surprises you'll encounter down the road.

Always include concrete payment deadlines—like "Net 30," meaning payment is due within 30 days. Clearly spell out penalties for late payments, such as interest rates or late fees. You can even sweeten the deal by offering early payment discounts, like a 2% discount if the invoice is settled within ten days. It encourages prompt payment and builds goodwill with your customers.

Also, don't overlook dispute resolution—clearly state the agreed-upon process for resolving disagreements about goods or services. When your customers know exactly what to expect, misunderstandings become less likely, and payments come in faster.

For higher-risk situations, consider asking the business owners to sign personal guarantees. This can provide extra security if the business itself ever runs into financial trouble.

One business owner told us this after implementing our contract advice:
"After using Cosmopolite's recommended contract language, our average payment time dropped dramatically—from 47 days down to just 29 days!"

When your payment terms are clear and your contracts solid, you're already halfway there to ensuring your receivables stay receivable.

By taking these proactive steps, you'll save time, money, and stress—leaving you free to focus on what you do best: growing your business.

Frequently Asked Questions about Collecting Debts from Companies

When it comes to how to collect a debt from a company, business owners often have similar questions. Let's address some of the most common concerns I hear from clients at Cosmopolite.

Can I Charge Interest or Late Fees on Unpaid Business Debts?

Yes, you absolutely can charge interest and late fees – and I strongly recommend you do! These charges serve two important purposes: they compensate you for the extended wait and motivate prompt payment.

However, there are some important guidelines to follow. First and foremost, your right to charge these fees must be clearly established in your original agreement. I've seen many businesses struggle to collect interest because they didn't include this language upfront.

Your interest rates should be reasonable – typically around 1-1.5% monthly on overdue balances. Late payment fees commonly run about 2% of the total bill. Anything significantly higher might be legally questionable and could damage business relationships.

Always inform customers about these charges clearly. Nobody likes surprise fees, and transparency helps maintain goodwill even during collections. And be consistent! Applying fees to some customers but not others could open you up to discrimination claims.

One of our clients, a wholesale supplier in Miami, increased their on-time payments by 32% simply by implementing and consistently communicating a clear late fee policy. Sometimes the mere presence of these fees is enough to prioritize your invoice in the payment queue.

How Long Do I Have to Collect a Business Debt?

Time is definitely not on your side when it comes to how to collect a debt from a company. The legal time limit – called the statute of limitations – varies significantly depending on where you're located:

In the US, you typically have 3-6 years for written contracts, though this varies by state. UK businesses generally have 6 years, while in France it's 5 years, and German companies have just 3 years to act.

What many don't realize is that certain actions can reset this clock. If the debtor makes a partial payment, acknowledges the debt in writing, or makes a new promise to pay, the countdown often starts over.

I always tell our clients at Cosmopolite that regardless of legal timeframes, you should pursue collection as quickly as possible. Our data shows that recovery rates drop dramatically with age – an invoice that's 90 days past due has about a 74% chance of collection, but by one year, that drops below 30%.

As one client told me after waiting too long to pursue a significant debt: "I wish I'd understood that every week I delayed reduced my chances of seeing that money." Don't make the same mistake!

What Should I Do if the Debtor Disputes the Debt?

Disputed debts can be frustrating, but they're also quite common. When a company challenges what they owe you, take a deep breath and follow a structured approach.

First, listen carefully to understand exactly what they're disputing. Is it the amount? The quality of services? The delivery timeframe? In my experience, about 25% of disputes involve legitimate misunderstandings that can be resolved through clear communication.

Next, review your documentation thoroughly. This is where those organized records we discussed earlier become invaluable. Contracts, delivery confirmations, email approvals – these can quickly resolve factual disagreements.

Respond with facts, not emotions. Present your evidence clearly and professionally. If the dispute persists, consider mediation – a neutral third party can often help both sides reach agreement. About 30% of disputed debts involve negotiable issues where some compromise makes sense for both parties.

Always document everything related to the dispute. These records will be crucial if you need to escalate to formal collection methods later.

I remember working with a London-based consulting firm facing a dispute over a £78,000 invoice. The client claimed services weren't delivered as specified. By providing detailed work logs and email approvals showing the client had actually requested and approved the very changes they were now disputing, we resolved the issue and secured full payment within three weeks.

When handling disputes, maintaining professionalism is key. Even when you're frustrated, preserving the business relationship can be valuable – if they're worth keeping as a customer. As one of our collection specialists likes to say, "You can be firm without being fierce."

Conclusion

Knowing how to collect a debt from a company transforms what seems like an impossible mountain into a manageable hill. Throughout this guide, we've walked through a practical approach that works in the real business world – from organizing your documentation and maintaining professional communication to knowing when it's time to bring in reinforcements.

If there's one thing I've learned in my years helping businesses recover what they're owed, it's this: timing matters enormously. As the saying goes, "The sooner you take action, the more likely you are to get paid." This isn't just a catchy phrase – our data consistently shows that invoices addressed within the first 30 days of becoming overdue have recovery rates nearly three times higher than those left to age past 90 days.

When you're facing unpaid invoices, remember you're not alone in this challenge. At Cosmopolite Debt Collection Agency, we've stood beside thousands of businesses worldwide – from small local operations to multinational corporations – helping them transform those frustrating unpaid receivables back into working capital. Our approach balances respectful but persistent communication with strategic escalation when necessary. It's an approach that's earned us a 4.52/5 rating from over 16,827 client reviews.

The global economy means debt collection challenges often cross borders. That's why our worldwide network spanning Miami, Paris, London, Madrid, Istanbul, Bangkok, Dubai, and offices throughout Europe, North America, and the UK provides the local expertise needed to steer different legal systems and cultural norms. Whether your debtor is across the street or across the ocean, we have specialists who understand the terrain.

Don't let those unpaid invoices drain your company's lifeblood – your cash flow. The strategies we've outlined here work, whether you implement them yourself or seek professional assistance. Small changes in how you approach credit management and debt collection can dramatically improve your financial health and business relationships.

Ready to turn those aging receivables into revenue? Learn more about our debt collection services and how we can tailor our approach to your specific situation. After all, you've earned that money – now it's time to collect it.