Collection Agency

A commercial collection agency is a third-party firm the creditor hires to pursue delinquent accounts after internal efforts stall. Agencies typically work on contingency, keeping 15 to 30 percent of what they recover (more for small, old, or previously worked accounts), so the creditor pays nothing on failure. Their leverage comes from specialization, persistence, and signal value: a demand from an agency tells the debtor the account has formally escalated and that credit reporting and litigation referral are the next stops.

Placement timing is the decision that most affects recovery. Collectibility decays fast, industry experience puts the erosion at roughly one to two percent of value per week once an account is seriously delinquent, so accounts should be placed when internal escalation is exhausted, commonly around 90 to 120 days past due, not held for a year of hopeful redialing. Signals for immediate placement regardless of age: the debtor stops taking calls, checks bounce, the business appears to be closing, or broken promises stack up. Holding an account internally past the point of diminishing returns is not persistence; it is depreciation.

Choosing and managing an agency is standard vendor management with legal stakes. Commercial (B2B) collections are not governed by the FDCPA, which covers consumer debt, but state licensing, contract law, and reputational exposure still apply, and if any accounts involve sole proprietors, consumer-law caution rises. Look for industry certification, bonding, trust-account handling of collected funds, transparent remittance and reporting, and clarity about when and how they recommend litigation. Feed agencies complete files, contracts, invoices, PODs, the collection history, because agencies triage their inventory, and well-documented claims get worked first.