Any small business that provides services on credit will eventually encounter a client who refuses to pay.  This can be frustrating for an entrepreneur as past due accounts can negatively affect the businesses ability to grow.

Many business owners decide to write off a debt as a loss at the end of the year and never attempt to collect on the money owed.  This is either due to not knowing a collection agency that is willing to work with small businesses or they are uncomfortable with the idea of attempting to collect on the money owed.

They are many benefits to hiring a collection agency to represent a small business.

Cash Flow

The top benefit of outsourcing to a collection agency is the increase in cash flow.  Collection agencies are able to take old past due accounts and collect payments that help a business’s bottom line.

Many business owners worry about investing more money into chasing after past due customers.  A frequent concern is how much does it cost to hire a collection agency.

Most collection agencies are willing to work on a contingency rate.  This means the collection agency only keeps a percentage of the money collected.

If the collection agency is unable to collect any money then the business owes them zero. This agreement creates a fair solution for both parties involved.

The increase in cash flow from the money recovered can then be invested back into the business to help cover expenses such as payroll, equipment, and advertising.


Most business owners are forced to juggle many duties to keep a business growing.  While they can handle managing clients and marketing task, chasing after a client who refused to pay many months ago is usually not the best use of time.

Agencies who handle collecting payments from past due debtors will provide better results while allowing the business to get back to the task that helps grow the business.

The net gain is more than just money recovered; it is the time saved and the reduction of unnecessary stress that will help boost productivity for a business.

Legal Exposure

The old days of collection agencies calling with high pressure tactics are long gone due to the passing of the FDCPA.  This law helps protects consumers from collection agencies that are harassing and crossing legal boundaries in an attempt to collect the money owed.

A small business attempting to collect money in house is risking breaking the endless laws set forward by FDCPA. This could lead to legal expenses that far surpass the original debt a business was attempting to recover.

Established collection agencies employ debt collectors that are well versed in what can and cannot be done while attempting to collect a debt.  This can allow a business owner to sleep well at night knowing the agency will represent the company in a professional manner.

A small business never wants to hire a collection agency to go after a past due customer but it can be a necessity in order to survive and stay profitable.

The benefits of outsourcing to a collection agency can add up to becoming a winning formula in what once seemed to be lost cause.

Luke McCann is the owner of and has worked debt collection field for nearly 20 years.