Place a commercial claim with a collection agency at Day 91-120 past due if the debtor is not engaging, the claim is at least $2,500, and no substantive dispute is outstanding. Earlier placement if the debtor has shown evasive behavior; later escalation to legal action if amicable agency work fails by Day 180.
A commercial creditor facing an unpaid invoice has a standard decision to make: at what point does internal collection stop producing value, and when should the case move to a third-party collection agency? Getting this decision right is one of the strongest determinants of net recovery. Placing too early wastes contingency fees on a debt that internal pressure would have resolved; placing too late allows debtor solvency drift that erodes recovery probability.
This article sets out the decision framework: the trigger thresholds, the claim-size math, and the internal disciplines that make placement timing systematic rather than reactive.
SignalActionDay 1-30 past dueInternal dunning, phone, document gatheringDay 31-60Firm demand from credit team, statutory interest invokedDay 61-90Final internal notice, escalation authority reviewDay 91-120Agency placement for undisputed claimsDay 121-180Legal escalation if agency amicable has not producedDay 181+Litigation, enforcement, or write-off decisionClaim <$2,500Internal only or small claims courtSubstantive disputeMediation, not collection agencyDebtor in bankruptcyProof of claim, stop collection activity
The matrix is calendar-driven, not event-driven. Accounts that drift past their trigger thresholds lose value regardless of how the collection process is eventually executed.
Empirical data from commercial recovery files shows a specific pattern around day 90 past due. The probability of recovery drops measurably from this point:
The deterioration is not primarily about debtor willingness. It is about debtor capacity. A debtor at day 90 often still has working capital and active customer relationships; the same debtor at day 365 has typically lost customers, lost credit lines, or entered informal workout. The creditor who escalates before the debtor's capacity erodes captures what the late-placer has lost.
The operational implication: internal escalation policy should be calibrated to produce placement at day 91-120 by default, not "when we get around to it." A soft internal policy that defers placement on each case by "one more month" erodes the full portfolio's recovery rate over time.
Before placing a specific case, run through these seven questions. If four or more return "yes," placement is indicated:
1. Is the debt at least $2,500? Most commercial agencies decline below this threshold due to minimum fees and per-file costs. Smaller claims are better handled internally or through small claims court.
2. Has the debt been unpaid for at least 60 days past the due date? Fresh debt (under 30 days) typically responds to internal dunning alone. Placing earlier usually wastes contingency fees.
3. Has the debtor failed to respond to at least two formal written demands? If the debtor has been uncommunicative despite written pressure, external escalation is appropriate.
4. Is the claim undisputed on substance? A substantively disputed claim is not a collection agency matter. Disputes belong in mediation or litigation.
5. Is the debtor solvent or at least verifiably operational? A dissolved or insolvent debtor's debt is not collectible through standard agency work. Verify through commercial registers.
6. Does the claim value justify the contingency fee? On a $3,000 claim at 30 percent contingency, the net after recovery is $2,100. If internal cost of pursuing the debt through small claims is lower and the creditor has capacity, that may be economic.
7. Is the creditor's internal escalation exhausted? If the credit manager and senior collectors have worked the case without success, continued internal effort has diminishing returns. Placement engages fresh escalation energy.
Four or more yes answers: place. Three or fewer: internal work may still have headroom.
A specific example. Claim $15,000, 90 days past due, UK debtor, no dispute raised. Agency options:
Option A: Pure contingency at 20 percent. Expected recovery net of fee at various rates:- Full recovery: $15,000 × 0.80 = $12,000 net- 75 percent recovery: $11,250 × 0.80 = $9,000 net- 50 percent recovery: $7,500 × 0.80 = $6,000 net
Option B: Continue internal pursuit. Probability-weighted estimate:- Internal cost: ~$500 of staff time at Day 90-180- Probability of recovery from continued internal work alone: ~20 percent- Expected value: 0.20 × $15,000 - $500 = $2,500
Option C: Small claims court or flat-fee attorney letter. Court fee approximately $400, staff time $200, attorney letter $350 fixed. Expected recovery probability ~45 percent for a formal court-issued demand on an undisputed commercial claim.- Expected value: 0.45 × $15,000 - $950 = $5,800
The agency placement ($12,000 expected on full recovery, $6,000-$9,000 on partial) dominates both alternatives for this profile. The tradeoff becomes tight when claim size drops (under $5,000, small claims court becomes competitive) or when internal pursuit has higher confidence (continued internal work on an already-responsive debtor).
In reviewed US and UK B2B recovery files over the last 18 months, the single most common mistake was not premature placement or late placement. It was inconsistent placement timing.
Creditors who placed cases variously at day 90, day 150, day 240, and day 365 (based on which case "needed attention" that week) produced materially worse portfolio outcomes than creditors who placed every qualifying case at day 91-120 consistently.
The inference: the consistency of the rule matters more than the exact day number. A creditor who places reliably at day 100 every time produces better aggregate recovery than one who averages day 100 but varies between 60 and 200. Debtors who observe inconsistent escalation timing assume the creditor is not systematic; debtors who observe reliable day-100 escalation adjust their own payment behavior.
The practical recommendation: establish a written policy with a specific day trigger (day 90, 100, 120 — the exact number matters less than the consistency). Route cases automatically via aging reports. Require a named person's written override for any deviation. The policy discipline itself produces 3-7 points of additional recovery on portfolios over a year.
Day 91-120 past due is the typical trigger for B2B commercial claims, provided the debt is at least $2,500, not substantively disputed, the debtor is solvent, and internal escalation has produced no response. Earlier if the debtor has shown evasive behavior; later if ongoing internal negotiations are making progress.
Technically, any commercial debt can be placed with an agency once due. In practice, 60-90 days past due is the typical minimum — earlier placement usually wastes contingency fees on cases that would have resolved internally. The optimal timing balances internal pursuit exhaustion against debtor solvency drift.
Commercial B2B contingency rates typically run 10-35 percent of recovered sums, scaled by claim size, debt age, and debtor location. Below $2,500 claim value, minimum fees often push effective rates above 35 percent. Fixed-fee demand letter packages run $75-$450.
Collection agency for amicable pursuit of undisputed commercial debt. Attorney for substantive disputes, complex documentation, high-value claims where litigation outcome is likely favorable, or cases where pre-action legal formality (letter of claim under PAP) is required. Attorneys often handle specific stages (demand letter, default judgment) at flat-fee rates that compete with contingency on high-probability cases.
Typically yes, subject to any termination clauses in the contract. Most agencies charge a termination fee (3-8 percent of claim value or fixed amount) for mid-case withdrawal. Understand the exit terms before placement; a agency with punitive exit clauses is a warning sign.
A claim past 90 days without agency placement is losing measurable value each week. Place a case for a timing assessment within one business day.
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