Small Business Collections: When Every Invoice Counts
Small Business Collections: You Can't Afford to Write It Off
The Small Business Problem
For a company with €50 million in revenue, a €25,000 unpaid invoice is a rounding error. For a small business with €500,000 in revenue, that same €25,000 is 5% of annual turnover — the difference between a profitable quarter and a loss.
Small businesses are disproportionately affected by unpaid invoices because they have the least capacity to absorb the loss, the fewest resources to pursue collection, and the strongest reluctance to damage customer relationships. This trifecta creates a pattern: small businesses extend credit, chase payment internally for months, and eventually write off the debt — absorbing a loss they can't afford.
Professional collection exists to break this pattern.
When to Engage a Collection Agency
The answer is simpler than most small business owners think: when your internal follow-up hasn't produced payment after 60 days.
Before 60 days, your internal AR process should handle it — reminders, phone calls, statement reconciliation. After 60 days, continuing to handle it internally isn't persistence. It's a cost. Every additional month of internal effort costs staff time, management attention, and declining recovery probability. A professional agency at day 60 resolves the claim faster and at higher rates than six more months of internal emails.
What Small Businesses Get Wrong
"It's too small for a collection agency." Most commercial collection agencies have no minimum claim size. A €2,000 claim on contingency at 20% costs the agency effort and the creditor €400 if recovered. If the alternative is writing off €2,000, the economics favour collection.
"I'll lose the customer." A customer who hasn't paid in 90 days is not a customer. They're a debtor. And professional collection, handled diplomatically, preserves more relationships than six months of increasingly strained internal follow-up. The debtor often respects the creditor more for escalating professionally than for sending email number fifteen.
"I should try a lawyer first." Lawyers are expensive for small claims. A solicitor's letter may cost €200-€500 and produces payment in roughly 30% of cases. A contingency-based collection agency costs nothing upfront and produces payment in 50-70% of cases. Lawyers become relevant when amicable collection fails — not as the first step.
The Small Business Collection Process
Step 1: Gather documentation — contract, invoices, delivery proof, correspondence. Step 2: Engage a contingency-based B2B collection agency with presence in the debtor's jurisdiction. Step 3: The agency handles contact, negotiation, and escalation. You get status updates. Step 4: Payment is recovered and transferred, minus the contingency fee.
No upfront cost. No legal complexity. No staff time diverted from running your business. The collection agency earns only when you recover — which means their incentives are perfectly aligned with yours.
Small businesses can't afford to write off bad debt. Professional collection exists to ensure they don't have to.
