The average small business in the United States has $84,000 in unpaid invoices. It often takes 21 to 30 days for an invoice to get paid; and, because many businesses only have a 27-day cash reserve, delinquent customers can push a small business into the red.
Debt collection agencies have the training and resources to collect past-due accounts after most businesses have given up. The older the account, the harder it is to collect. On average, however, agencies have about a 20% success rate. While this may seem low, these are funds that would otherwise have gone completely unrecovered.
We reviewed over a dozen debt collection agencies and chose the best ones based on how easy they are to work with, fees, and best practices that balance pursuing debtors and maintaining good customer relationships. Here are our top choices.
Best Overall : Summit Account Resolution
Founded in 1996, Summit Account Resolution’s mission is to “handle accounts with sensitivity and compassion...to recover what you’re owed without alienating the customers and vendors who are vital to your business.” The agency is accredited with the Better Business Bureau (BBB) and also enjoys an A+ rating with the bureau. We chose it as the best overall since it offers customized approaches, transparent pricing, and both consumer (B2C) and commercial (B2B) collections services.
Summit focuses on creating a custom approach for each account it maintains. Its emphasis on being a “friendly debt collector” ensures that clients are treated with dignity and keeps a good relationship with the company trying to collect a debt. As a result, Summit refuses to employ robocalls, threats, or aggressive collection tactics.
Summit also offers simple and thorough reporting to make it easier to track delinquent accounts. Users can access accounts through an online portal, place new accounts for collection, and download reports 24/7. Summit also offers easy-to-use financial calculators and quick guides to debt collection laws and statutes of limitations in all 50 states.
Summit takes 7.5% to 50% of the balance of each account it collects on, with an average rate of around 35%. The agency requires a $50 minimum collecting balance on each account and also offers accounts receivable consulting, skip tracing, credit bureau reporting, and litigation.
Best for First-Time Collections : National Service Bureau
Founded in 1986, Seattle-based National Service Bureau (NSB) offers a range of collection services to help businesses collect on accounts past due. While the agency is not BBB accredited, it does enjoy an A- rating from the bureau. We chose it as the best for first-time collections because it offers educational resources to help businesses streamline their accounts receivable and collections processes.
NSB uses multiple channels to reach out to debtors, including mail, email, fax, and phone. The agency puts a strong focus on pre-collection and claims that it can usually resolve past-due accounts prior to placing them in collection. If pre-collection doesn’t work, NSB can also take delinquent accounts to litigation.
NSB provides clients regular updates on past-due accounts, has an online portal for clients to manage accounts, and maintains an online payment portal for debtors.
In addition, NSB offers two free ebooks, "5 Step Guide On Choosing The Right Collection Agency" and "Bulletproof Your Accounts Receivable Process," as well as articles and online resources to educate businesses on working with collection agencies, how debt collection works, improving accounts receivable management, and more.
Unfortunately, NSB doesn’t list online its rates or the percentage it takes to collect on accounts. Businesses will have to speak directly with an agent to get a custom quote.
Most Affordable : Rocket Receivables
Rocket Receivables is a subsidiary of TSI, a leading provider of outsourced accounts receivable management that provides simplified debt recovery solutions for small businesses. We chose them as the most affordable option because they offer fixed-fee pricing with no percentage taken on collections.
Rocket Receivables uses a two-stage collection process: the first for accounts less than 120 days past due, and the second for older accounts and involves sending “diplomatic” collection letters to delinquent account holders. Rocket Receivables charges from $14.95 to $21.95 per account paid upfront, with 100% of the collected balances going to the business.
Stage Two uses a combination of calls, negotiation strategies, and legal action where appropriate to collect past-due accounts. Collections in Stage Two are contingency-based, so users only pay a predetermined percentage of what’s collected or nothing if Rocket Receivables can’t collect. Any recovered portions accounts that move from Stage One to Stage Two are split 50/50 between Rocket Recovery and the client.
With both stages, users get 24/7 access to all accounts and reporting and can start, stop, or suspend collections; approve partial payments; or reduce balances owed anytime.
Best Business to Consumer : RFGI
Founded in 2008, Rozlin Financial Group (RFGI) offers comprehensive consumer debt collection services with a personalized approach. The agency is accredited with the Better Business Bureau and has an A rating with the organization. We chose it as the best for business to consumer (B2C) collections because it combines highly trained staff with extensive reporting and skip-tracing to improve recovery rates.
RFGI agents participate in regular training to stay up to date on the best collection techniques, laws, and regulations. This allows them to create customized approaches to increase recovery rates instead of relying on scripts. In addition to contacting clients via mail, web chat, phone, and email, RFGI also employs four different skip-tracing databases to track down consumers.
Like many other agencies, RFGI offers an online portal where clients get status updates on accounts and receive detailed reports. Debtors can pay their accounts via check, credit card, or the online portal.
RFGI charges a fee based on a percentage of the debt it collects. Clients don't have to pay until the debt is collected and aren’t charged anything if the agency can’t collect. RFGI has a five-account minimum and charges extra if an account needs to be sent to litigation. Custom quotes on RFGI’s fees are only available by talking to an agent.
Best Business to Business : Prestige Services
Prestige Services, Inc. (PSI) is a Nebraska-based debt collection agency founded in 1996 that specializes in commercial account recovery. The agency is BBB accredited and has an A+ rating with the bureau. We chose it as the best for B2B collections because it offers quick, efficient debt collection services and excellent customer service.
PSI’s agents have extensive knowledge of the commercial collection industry and boast a commercial collection rate that's 5% to 10% higher than other agencies. The agency’s 10-day free demand service means PSI won’t charge a fee if a debtor pays within 10 days of placement. PSI also doesn’t collect a fee if it fails to collect a debt.
PSI uses a variety of techniques to collect accounts, including pre-collection services, professional skip-tracing, free final notice forms, and attorney forwarding. An online portal makes it easy to request a quote and check the status of any account.
The agency takes 25% of the account balance for accounts between $200 and $3,000 and 22% for accounts between $3,000.01 and $20,000. We were quoted an 18% rate for 10 accounts of $5,000 each. Fees for litigation are extra and can be as high as 40%. PSI has a $200 minimum collection.
What Are Debt Collection Agencies?
Debt collection agencies act on behalf of a business to recover unpaid invoices and other debts from the business’ customers. It’s important to note that debt collectors don’t buy delinquent accounts, they simply try to collect money owed to a business. If a debt can’t be collected, the business that’s owed is still at a loss for those funds.
Collection agencies rely on a number of tactics to collect delinquent accounts, including contacting customers via mail, email, phone, and skip-tracing to track them down. The best agencies have trained staff who can make custom arrangements with each debtor to ensure the best settlement possible. When necessary, debt collection agencies can even send debtors to litigation as a last-ditch effort to collect funds.
How Can I Find the Right Debt Collection Agency?
When choosing a debt collection agency, it’s important to find out how its collection process works. Remember that it’s not just about collecting money but maintaining a good relationship with customers, even the ones who paid late.
Avoid agencies that have been called out for aggressive tactics or have reviews that indicate shady practices, including threatening or hostile communications with customers. Make sure the agency has trained staff who understand the rules and regulations of debt collection and can treat each account individually instead of using the exact same approach.
What Is the Difference Between a Debt Collector and a Debt Buyer?
Debt collection agencies don’t buy delinquent accounts from businesses. By contrast, debt buyers purchase past-due accounts from businesses for a few cents on the dollar of what’s owed.
While a debt buyer guarantees that a business gets some money from a delinquent account, the percentage is often much lower than what a collection agency can recover. For instance, a $1,000 debt might be purchased by a debt buyer for $50 while a debt collector might be able to recover the full amount and take a collection fee of 25% to 50% of what’s owed.
What Is the Cost of Debt Collection Agencies?
Debt collection agencies typically take between 25% and 50% of each account recovered. While most don’t have sign-up fees, many will only deal with accounts with a set minimum balance or a minimum number of accounts. Sending an account to litigation costs extra.
A common practice among many of the agencies reviewed is that no fee is charged to a business if an account can’t be collected.
Are Collection Agencies Worth It?
If a business has done all it can to recover a delinquent account, a collection agency may be worth trying. For one thing, it frees up the business’ resources from trying to collect debts. And, since most agencies don’t charge any upfront fees but just take a percentage of what’s collected, getting something back is certainly better than getting nothing.
How We Chose the Best Collection Agencies
Debt collection agencies tend to get a lot of bad reviews, mostly from customers who owe them money and don’t like being hassled. While it was important to sift through customer complaints to make sure the agencies we reviewed weren’t using shady or intimidating tactics, we ignored most consumer reviews we found. With that said, we tried to focus on agencies with a high rating and accreditation with the Better Business Bureau.
We looked at over a dozen agencies in our review. Because small businesses suffer most from unpaid accounts and can’t really pay to collect, we focused on agencies with transparent pricing and no upfront fees. Our one exception was Rocket Receivables, which does charge a modest upfront fee but returns 100% of the balance of accounts it recovers.
It was also important for us to choose agencies that used multiple channels to contact customers and didn’t just give up after a few tries. Agencies that specialized in either B2C or B2B collections and that offered custom solutions for each debtor also stood out. Finally, we liked agencies that also offered educational resources and customer support to help small businesses better manage accounts receivable and collections.