Sending an Account to Collections: Cost & Requirements Explained

Key Takeaways

• Collection agencies typically charge contingency fees of 10–25% of recovered funds, meaning you only pay when they successfully collect your debt.
• Accounts sent to collections within 90 days have significantly higher recovery rates compared to older debts, making timing critical for maximizing results.
• Complete documentation such as invoices, contracts, proof of delivery, and communication records is essential for successful debt recovery through professional agencies.
• Southwest Recovery Services (SWRS) operates exclusively on contingency with no upfront costs, offering 20+ years of expertise in B2B commercial collections with transparent reporting through their secure client portal.

Why Businesses Send Accounts to Collections

Unpaid invoices represent more than just missing revenue; they threaten your business’s operational stability. The statistics tell a sobering story—accounts that reach 90 days overdue have only a 69.6% chance of being collected. Wait until 180 days, and that probability drops to 52.1%. After a full year, you’re looking at just a 22.8% recovery rate.

Professional collection agencies bring specialized expertise that most businesses don’t have in-house. They understand the legal realities, know how to locate difficult debtors, and employ proven strategies that increase recovery rates while staying compliant with regulations. 

For businesses already stretched thin, outsourcing collections allows you to focus on operations while experts handle debt recovery diplomatically.

Understanding Collection Agency Costs

Contingency Fee Model

Most reputable collection agencies, including Southwest Recovery Services (SWRS), operate on a contingency fee basis. This means you pay nothing up front; the agency only earns money when it successfully recovers your debt.

Contingency fees for commercial collections typically range from 10–25% of the amount recovered. Rates vary based on:

• Account age: Fresher debts (under 90 days) generally command lower fees.
• Debt size: Larger balances may justify lower percentage rates.
• Complexity: Straightforward cases cost less than those requiring extensive skip tracing or legal action.
• Volume: Businesses placing multiple accounts may negotiate better rates.

This structure eliminates financial risk. If the agency doesn’t collect, you don’t pay.

Legal & Court Costs

When collection efforts require legal intervention, additional costs come into play. Some agencies charge an additional percentage (often around 10%) when litigation becomes necessary. Court filing fees and attorney fees are typically separate from standard collection fees.

Requirements for Sending an Account to Collections

Essential Documentation

Before sending an account to collections, gather these critical documents:

• Original invoices: All bills sent to the debtor, showing dates, amounts, and terms.
• Contracts or agreements: Purchase orders, service agreements, or terms of sale.
• Proof of delivery: Shipping confirmations, signed receipts, or service completion documentation.
• Payment history: Records of any partial payments, returned checks, or payment plan agreements.
• Communication logs: Emails, letters, and notes from phone conversations showing your collection attempts.

Missing documentation doesn’t disqualify an account from collections, but incomplete files significantly reduce recovery chances and slow the process.

Accurate Debtor Information

Collection agencies need current, accurate contact information. Provide full legal business name, primary contact person details, physical address, phone numbers, email addresses, and any additional locations. Starting with accurate information dramatically improves success rates.

Timing Considerations

Most experts recommend acting after 60–90 days of non-payment, assuming you’ve exhausted reasonable internal collection efforts. A balanced approach involves sending payment reminders at 30 and 60 days past due and making direct contact attempts. If needed, offer payment arrangements, send a final notice, and engage professional collectors only if these efforts fail.

Legal & Compliance Requirements

Collection agencies must comply with federal regulations like the Fair Debt Collection Practices Act (FDCPA) and state-specific laws. Before sending accounts to collections, make sure your contracts include provisions for collection costs where permissible. 

Confirm that you have the legal right to collect the debt, that the debt is legitimate and not under valid dispute, and that you’re working with a licensed, bonded agency.

How the Collections Process Works

When you submit an account to a collection agency like SWRS, they first conduct a thorough review and verification, examining your documentation and determining the best collection strategy. Professional collectors then initiate contact through initial letters, phone outreach, email communication, and text messaging where appropriate.

Many commercial debts are resolved through negotiated settlements or payment plans, or lump sum settlements for less than the full balance, extended payment plans, or partial payments with agreed timelines. When debtors refuse to pay despite repeated attempts, agencies escalate to legal remedies, including attorney demand letters, lawsuits to obtain judgments, and post-judgment collection.

Throughout the process, professional agencies provide regular updates. For example, at SWRS, we offer a secure client portal where you can track account status, view collection notes, and monitor recovered payments in real-time.

Common Mistakes to Avoid

Before you send an account to collections, make sure you’re not falling into these common traps that can delay or derail recovery.

• Waiting Too Long: Every month you delay reduces your chances of collecting. Establish clear timelines for internal collection efforts, then stick to them.
• Incomplete Information: Submitting accounts with missing documentation or wrong contact information wastes time and money. Verify you have complete files before submission.
• Ignoring Agency Communication: Collection agencies may need additional information or authorization. Designate someone to serve as the primary contact and ensure quick responses.
• Unrealistic Expectations: Not every debt can be collected. Debtors go out of business, declare bankruptcy, or lack assets to satisfy judgments.

Why Send Your Accounts to Southwest Recovery Services for Efficient Collections

At Southwest Recovery Services (SWRS), we bring over 20 years of specialized experience in B2B commercial collections. Serving businesses across trucking, logistics, oil and gas, medical, and professional services, we help companies recover what they’re owed.

We operate exclusively on a contingency-only basis, meaning zero upfront costs or monthly fees. You only pay when we successfully recover your funds, eliminating financial risk. This performance-based model ensures our interests align perfectly with yours. Our experienced collectors employ respectful, professional communication that recovers funds without burning bridges, using omnichannel outreach across phone, email, text, and mail.

We provide a secure client portal that ensures complete transparency with 24/7 access to account status, collection activities, and recovered payments. With 12 offices across six states and a compliance-first approach, we maintain the expertise and legal knowledge to pursue commercial debts nationwide while staying within all regulatory requirements.

Learn More About Southwest Recovery Services

Frequently Asked Questions (FAQs)

How much does it cost to send an account to collections?

Most commercial collection agencies operate on contingency fees ranging from 10–25% of recovered funds, meaning you pay nothing unless they successfully collect your debt. 

The exact percentage depends on factors like account age, debt size, and complexity. Accounts under 90 days old typically qualify for lower rates, while older or more difficult cases may command higher percentages.

What documentation do I need to send an account to collections?

Professional collection agencies require comprehensive documentation to pursue debts effectively. Essential items include all original invoices showing dates and amounts owed, contracts or service agreements establishing the business relationship, proof of delivery or service completion, payment history records including any partial payments, and logs of your communication attempts with the debtor. 

Additional helpful documentation includes credit applications with personal guarantees, bounced check records, and any correspondence where the debtor acknowledged the debt.

How long does the commercial collection process take?

Collection timelines vary based on account age and debtor responsiveness. For accounts less than 90 days past due, expect initial results within 30–45 days of agency placement. Older accounts (180+ days overdue) typically require 60–120 days for resolution. 

Cases requiring legal intervention can extend 6–18 months, depending on court schedules and whether debtors contest judgments.

When should I send an account to collections?

It is best to start engaging professional collectors after 60–90 days of non-payment, assuming you’ve exhausted reasonable internal collection efforts. 

Before involving an agency, send payment reminders at 30 and 60 days past due, make direct contact attempts, offer payment arrangements if appropriate, and send a final notice. If these efforts fail, it’s time for professional intervention.

Why choose Southwest Recovery Services (SWRS) for commercial collections?

At Southwest Recovery Services (SWRS), we bring over 20 years of specialized B2B commercial collection experience serving businesses across the trucking, logistics, oil and gas, medical, and professional services industries. 

We operate exclusively on contingency with zero upfront costs, where you only pay when we successfully recover your funds. Our relationship-preserving approach employs respectful, professional communication that recovers money without damaging valuable business relationships.

*Note: Recovery rates mentioned are for general reference only and not guaranteed. Actual results vary by account and industry. Contact Southwest Recovery Services for a customized quote.