How Does a Business Send Someone to Collections: Step-by-Step Guide

Key Takeaways

• The collections process begins internally with debt verification, payment reminders, and direct negotiations before escalating to a professional agency—typically after 60–90 days of non-payment.
• Proper documentation, including signed contracts, invoices, delivery confirmations, and communication records, is critical for successful debt recovery.
• Professional B2B collection agencies use multi-channel communication strategies over 120+ days, combining phone calls, emails, SMS, and formal letters to maximize recovery rates.
• Contingency-based collection services eliminate upfront costs—businesses only pay a percentage (typically 15–40%) of successfully recovered amounts.
• Southwest Recovery Services (SWRS) combines 20+ years of commercial collection expertise with diplomatic, relationship-preserving strategies across trucking, logistics, oil & gas, and property management sectors.

The Issue with Collections

Every business owner knows the frustration: you’ve delivered your product, completed the service, sent the invoice—and now you’re waiting. Days turn into weeks, weeks into months, and that payment still hasn’t arrived. Your working capital is tied up, your cash flow is suffering, and you’re facing a difficult decision about recovering what you’re owed.

Sending an account to collections isn’t anyone’s first choice, but sometimes it’s the only practical path forward. When done correctly with the right partner, the collections process can recover your funds while preserving important business relationships.

Step-by-Step Guide Businesses Send Someone to Collections

Step 1: Verify the Debt Is Legitimate

Before taking any collection action, confirm the debt is valid and the amount is accurate. You’ll need signed contracts or purchase orders, itemized invoices, delivery confirmations or proof of service completion, and communications about the transaction. Review everything to ensure the amount owed matches what was delivered or performed.

Step 2: Send Initial Payment Reminders

Most late payments are oversights, not intentional. Give your customer the benefit of the doubt with polite reminders. Send a friendly email when an invoice becomes 7–10 days overdue. Keep the tone professional and helpful. Follow up at 30 days past due, then again at 45 days, maintaining a respectful tone while becoming more direct. These early reminders resolve 60–70% of overdue invoices without further escalation.

Step 3: Make Direct Contact & Negotiate Solutions

When email reminders fail, pick up the phone. Phone calls allow you to understand what’s happening: Is there a dispute? Cash flow problems? A lost invoice?

Be prepared to offer solutions. Payment plans can help customers facing temporary difficulties. Early payment discounts might motivate a quick resolution. The goal is to recover your money while keeping the door open for future business.

Step 4: Send a Formal Demand Letter

If reminders and conversations don’t produce results after 60–90 days, formalize your collection efforts with a demand letter.

A demand letter clearly states the amount owed, references the original contract, outlines your legal rights, sets a specific deadline for payment (typically 10–15 business days), and explains consequences if payment isn’t received. The tone should be firm and professional.

Always send demand letters via traceable methods such as certified mail with return receipt or email with read receipt. This documentation proves you made a formal demand, which becomes important if legal action is necessary.

Step 5: Choose the Right Collection Agency

When internal efforts haven’t produced results after 90–120 days, professional help makes financial sense. Look for agencies specializing in commercial collections rather than consumer debt. B2B collections require understanding complex payment terms, industry practices, and relationship preservation.

Verify the agency operates on a contingency basis, meaning you only pay when they successfully recover funds. Confirm they use respectful, professional communication methods rather than aggressive tactics that could damage your reputation.

Step 6: Transfer Documentation to the Agency

Prepare a complete file for each account. Provide copies of all original contracts, every invoice related to the debt, proof of delivery or service completion, records of all previous payment reminders and conversations, and any dispute documentation. 

Organize everything chronologically. The more organized and thorough your documentation, the higher your recovery rate will be.

Step 7: The Professional Collection Process

Professional agencies implement a structured collection process designed to maximize recovery while maintaining professionalism.

Most reputable B2B agencies use a multi-channel approach over 90–120 days: weekly phone calls at strategic times, professional emails explaining the debt, SMS reminders for tech-savvy contacts, and formal letters for documentation purposes.

The agency tracks every interaction, documents promises to pay, and escalates when necessary. They’ll negotiate payment arrangements, offer settlements for debtors facing financial hardship, and keep you informed throughout. You’ll typically have a dedicated account manager providing regular updates.

Step 8: Evaluation & Continued Efforts

After the initial collection period (typically 120 days), the agency evaluates each account’s recovery potential. Promising accounts continue receiving active collection efforts with adjusted strategies.

For accounts with limited response, agencies deploy advanced technologies, including automated dialing systems and skip-tracing services, to locate debtors who have changed contact information. This extended effort can last several additional months.

Step 9: Legal Action as the Final Resort

When all collection efforts are exhausted and the debt amount justifies the expense, legal action becomes the final option.

Professional agencies typically have relationships with attorneys specializing in commercial debt recovery. The legal process begins with filing a lawsuit, which often motivates previously unresponsive debtors to negotiate a settlement.

If the case proceeds to judgment, the creditor can pursue collection through liens on business assets, bank account garnishments, or other legal remedies. Litigation extends the recovery timeline to 6–12 months or longer and adds legal costs, but for significant debts where other methods have failed, it’s often the only remaining path.

Southwest Recovery Services: The Best for Your B2B Collection Needs

Following the right process when sending accounts to collections protects both your revenue and your business relationships. At Southwest Recovery Services, we’ve spent over 20 years perfecting this balance for companies across logistics, freight, oil and gas, contracting, and property management sectors.

Our veteran collectors combine respectful, strategic outreach with proprietary tracking software that ensures every follow-up happens on schedule and no commitment falls through the cracks. This disciplined approach, guided by daily oversight from founder Steven Dietz, recovers your funds without the aggressive tactics that damage future business opportunities.

We operate on a contingency basis, meaning no risk to you, as we only get paid after recovering your money. This performance-based model means that our goals align perfectly with yours: maximum recovery with minimum friction.

Contact Southwest Recovery Services Now

Frequently Asked Questions (FAQs)

How long should I wait before sending an account to collections?

Most businesses wait 60–90 days after an invoice becomes past due before engaging a collection agency. Give internal efforts a fair chance through reminders, calls, and demand letters. However, don’t wait too long because success rates drop significantly after 120 days.

Will sending someone to collections damage my business relationship?

Not necessarily, especially with a professional B2B agency that understands relationship preservation. The agency acts as a neutral third party, separating the financial dispute from ongoing operations. Professional agencies use diplomatic approaches focused on finding solutions, which often preserve future business possibilities.

What documentation do I need to send someone to collections?

You’ll need all original contracts or service agreements, itemized invoices, proof of delivery or service completion, records of all previous collection attempts, and any correspondence related to disputes. Organize everything chronologically so the agency can quickly understand the complete history.

What does it cost to use a collection agency?

Most B2B agencies operate on a contingency fee basis with no upfront costs. You only pay when the agency successfully recovers money. Contingency rates typically range from 15% to 40% of the amount recovered, depending on the age of the debt, total amount owed, and complexity. This performance-based model eliminates financial risk—if nothing is recovered, you owe nothing.

Why should I choose Southwest Recovery Services (SWRS)?

At SWRS, we specialize in B2B commercial debt recovery, and we bring over two decades of experience in trucking, logistics, oil and gas, property management, and contractor services. We operate strictly on a contingency basis, use technology-driven tracking, and maintain founder involvement in daily operations. We provide the professional persistence needed to convert aging receivables into working capital while maintaining your business reputation.