Michelle Bannon
September 27th, 2024

Best Collection Agency For Small Business in 2024[Top 6 Picks]

Guide

Collection agencies can be tricky for small businesses. In this article, we’ll break down the 6 best collection agencies for small business, detailing their services, costs, and pros & cons. Whether you need efficient debt recovery or comprehensive support, this guide will help you find the right fit.

Let’s dive in and discover the top-rated options to boost your financial health.

Top 6 Best Collection Agency for Small Business

As a small business owner, dealing with unpaid invoices can be a major headache. Hiring a professional debt collection agency can help recover outstanding payments while allowing you to focus on running your business.

Here are six of the best debt collection agencies for small businesses:

1. IC System

IC System stands as a reputable collection agency for small businesses, priding itself on ethical debt collection practices. They have been in the industry since 1938, providing a range of customizable services designed to help businesses recover past-due accounts while maintaining customer relationships.

Let’s delve into what they offer, their pricing model, the pros and cons, and how to get in touch with them.

Services Offered

IC System offers a variety of services tailored to meet the unique needs of different businesses. Here are the key services provided:

Customizable Debt Collection Programs

Target Audience: Designed for small businesses handling 50 or fewer debts per month.
Focus: This program emphasizes collecting past-due accounts while maintaining the integrity of customer relationships.
Methodology: Utilizes a combination of letters, emails, and phone calls to recover debts.
Phased Approach: This service is divided into two phases.
Phase One: A letters-only approach where businesses retain 100% of the money recovered.
Nationwide Services: IC System is fully US-based and licensed across the country, boasting a client tenure averaging 16 years.
Consumer-Friendly Approach: The company prioritizes ethical collection practices, ensuring that customer relationships are maintained.
Data Security: IC System adheres to strict security and compliance protocols to protect client data.

Additional Support

Consultations: IC System offers consultations to help businesses identify the best debt recovery solutions based on their specific needs.
Regulatory Compliance Insights: They provide insights on compliance with new regulations, such as Regulation F, which requires additional information from creditors sending accounts for collection.

Cost & Pricing

IC System provides various debt collection programs with specific pricing structures to suit different business needs.

Phase One: Correspondence only (letters, emails, texts). Businesses retain 100% of the recovered money.
Phase Two: Intensive collection efforts with additional services like credit reporting, skip tracing, and attorney referrals.
Contingency Fee:
First 180 Days: 35% on recoveries, with a $50 minimum balance size.
After 180 Days: The contingency fee increases to 50%.
Setup Fee: $75 setup fee.
Service Features: Inbound and outbound phone handling. Businesses can start collection activities within one business day.

Pros and Cons

Pros	Cons
Ethical Practices: Emphasis on ethical and consumer-friendly debt collection.	Contingency Fees: Fees can be relatively high, especially after 180 days in the InstiCollect program.
Customizable Programs: Tailored solutions to meet the specific needs of different businesses.	Setup Fee: Initial setup fee of $75 might be a barrier for very small businesses.
Nationwide Services: Licensed across the country, offering a broad reach.	Phase Two Costs: Additional costs for intensive collection efforts in the Recovery Plus program.
Data Security: Adherence to strict security and compliance protocols.
Client Tenure: Long-standing relationships with clients, averaging 16 years.

2. Atradius Collections

Atradius Collections is a top-notch collection agency for small businesses, known for its global presence and comprehensive debt recovery services. Their expertise ensures that small businesses can effectively manage outstanding payments and reduce credit risks.

Let’s delve into the specifics of what they offer, how much it costs, and weigh the pros and cons.

Services Offered

Atradius Collections provides an extensive range of services designed to help businesses recover debts efficiently:

Amicable Debt Collection: This involves friendly collection efforts aimed at maintaining positive relationships with debtors while recovering outstanding payments.
Legal Debt Collection: When amicable methods fail, Atradius offers legal support to ensure debts are recovered through formal litigation.
Insolvency Services: Assistance in navigating the complexities of insolvency proceedings to recover debts.
Accounts Receivable Management: Comprehensive management of accounts receivable to streamline debt collection processes.
Credit Management: Providing credit information and analysis to help businesses make informed decisions about their customers and partners.

These services are tailored to accommodate various time zones, currencies, jurisdictions, and languages, ensuring a comprehensive approach to debt collection and management.

Cost & Pricing

Understanding the cost structure of Atradius Collections is crucial for small businesses:

No Upfront Fees: Atradius operates on a “”No Win, No Fee”” basis, meaning you only pay if they successfully recover your debt.
Commission-Based Pricing: The cost is typically a percentage of the amount recovered. This can vary based on factors such as the age of the debt and the complexity of the case.
Custom Quotes: Atradius provides customized quotes based on your specific needs and the nature of your debt portfolio.

This flexible pricing model ensures that small businesses can access their services without significant upfront investments, making it a viable option for many.

Pros and Cons

Pros	Cons
Global Reach: Presence in over 200 countries ensures efficient handling of international debt collections.	Commission-Based Costs: The percentage of recovered debt as a fee can be high, depending on the complexity of the case.
Diverse Services: Comprehensive range of services from amicable collections to legal actions.	Potential Delays: Legal processes can extend the time it takes to recover debts.
No Upfront Costs: “No Win, No Fee” model reduces financial risk for small businesses.	Variable Success Rates: Success in debt recovery can vary based on the debtor’s location and circumstances.
Expertise: Long history and industry knowledge enhance effectiveness in debt recovery.

3. Summit A*R

Summit AR, a well-established collection agency, has been in the business since 1996. Known for its innovative and compassionate approach to debt recovery, this agency has a reputation for achieving recovery rates nearly double the industry average.

Let’s delve into the specifics of what makes Summit AR a top choice for small businesses looking for a collection agency.

Services Offered

Summit A*R offers a comprehensive range of services designed to meet the unique needs of their clients:

Primary Collection Services: These services target standard accounts receivable, ensuring clients can recover money owed efficiently.
Specialized Collection Services: For unique or complex accounts, Summit A*R provides tailored solutions to handle special cases with care and precision.
Skip Tracing: Their skip-tracing department, managed by a licensed private investigator, enables them to locate debtors and their assets effectively.
Litigation Assistance: For accounts that are particularly difficult to collect, they offer full-service litigation support.
Credit Bureau Reporting: Summit A*R reports to all three major credit bureaus at no additional cost, enhancing the chances of debt recovery.
Accounts Receivable Consulting: Clients benefit from seasoned professionals who provide consulting to optimize accounts receivable processes.
Custom Collections Programs: They create custom programs tailored to the unique needs of each client’s business, ensuring optimal results.

Cost & Pricing

Summit A*R uses a contingency fee model, meaning they only get paid if they successfully recover the debt. This model ensures that clients are not spending money without seeing results. The typical contingency fees range between 7.5% and 50%, depending on:

Age of the Debt: Older debts might incur higher fees due to the increased difficulty in recovery.
Type of Debt: Different types of debts might have varying levels of complexity.
Balance Size: Larger balances might have different fee structures compared to smaller balances.

This transparent fee structure, without hidden costs or minimums, allows clients to understand their financial commitments clearly.

Pros and Cons

Pros	Cons
Experienced Team: Long-term staff of trained and licensed professionals.	Fee Range: Contingency fee range can be broad, which might concern some businesses.
Ethical Practices: Emphasis on professionalism and integrity through their ‘P.H.D. Philosophy’ (Preserve Human Dignity).	Complex Cases: Specialized services for complex accounts may involve more detailed processes.
Transparency: Clear fee structures without hidden costs.
High Recovery Rates: Nearly double the industry average.
Compliance and Ratings: Impeccable compliance record and an A+ rating with the Better Business Bureau (BBB).

Also Read: Detect and Prevent Payroll Fraud in Your Business Today

4. Rocket Receivables

Rocket Receivables offers a structured debt collection service designed to enhance business cash flow while maintaining customer relationships.

Their service is divided into two distinct stages, each tailored to different types of accounts based on their age and difficulty of collection.

Services Offered

Rocket Receivables provides two primary stages of service, each designed to address different phases of debt collection:

Stage One: Fixed Fee Collection

Target Accounts: Accounts less than 120 days past due.
Approach: Begins with a first-party reminder in the business’s name, followed by three third-party demands.
Pricing: Fixed fee, allowing businesses to budget effectively.
Additional Option: ‘Rocket Booster’ service includes a phone call to enhance communication with the debtor.

Stage Two: Contingency Collection

Target Accounts: Accounts older than 120 days or difficult to collect.
Approach: Utilizes traditional collection tactics such as written demands, phone calls, negotiations, and legal action if necessary.
Pricing: Contingency-based, meaning businesses only pay a percentage of the amounts collected, with no upfront fees.

Cost & Pricing

Rocket Receivables offers two main pricing options for their debt collection services:

Stage One: Fixed-Fee Collections

Pricing: Starts at $21.95 per account for 10 accounts, with discounts for higher volumes (e.g., $14.95 per account for 50 accounts).
No Hidden Costs: No sign-up fees, hidden costs, or percentages taken. 100% of recovered money is sent to the client.
Guarantee: Clients will receive a minimum of two times the total purchase price paid by the end of the Stage One term.

Stage Two: Contingency Collections

Billing: Only billed if Rocket Receivables collects on the account, otherwise, the client pays nothing.
Splitting Recovered Amounts: Rocket Receivables splits the recovered amount 50/50 with the client once any portion of the delinquent amount is recovered.
Automatic Transfer: Unresolved accounts from Stage One are automatically transferred to Stage Two at no additional fee.

Pros and Cons

Pros	Cons
Tailored Strategies: Customized approach based on the chosen stage.	Contingency Fees: Stage Two involves sharing 50% of recovered amounts, which may be high for some businesses.
No Hidden Fees: Transparent pricing allows for confident engagement.	Service Scope: Primarily focuses on U.S.-based collections, limiting international reach.
Focus on Growth: Outsourcing debt collection lets businesses concentrate on core operations.	Fixed Fee: Initial costs in Stage One may be a barrier for very small businesses with limited budgets.
Guarantee: Minimum recovery guarantee provides added financial security.

Also Read: 15 Ways to Develop Persistence? [Build Resilience and Thrive]

5. Cedar Financial

Cedar Financial offers a range of professional debt recovery services, focusing on both domestic and international collections. Established in 1991, the company aims to provide comprehensive solutions tailored to various industries, including education, healthcare, commercial, government, and retail.

Services Offered

Cedar Financial is committed to providing top-notch debt recovery services by focusing on a few key areas:

Consumer-Centered Approach: Cedar Financial prioritizes communication with clients to find amicable solutions for unresolved accounts. They emphasize a respectful and understanding interaction with debtors, aiming to maintain positive relationships.
Industry-Specific Expertise: The company specializes in handling non-performing loans, particularly in the education sector, where they have successfully increased student re-enrollment by resolving outstanding balances.
Performance-Based Fees: Cedar Financial operates on a no-risk model, where clients are not obligated to pay commissions or fees until the debt is successfully collected. This approach minimizes financial risk for clients while incentivizing effective collection efforts.
Global Reach: With a local presence around the world, Cedar Financial is equipped to handle international debt recovery, employing creative strategies to expedite payment processes.
Positive Client Feedback: Testimonials highlight Cedar Financial’s professionalism, responsiveness, and ability to handle sensitive situations with care, contrasting with the often negative perceptions of debt collectors.

Cost & Pricing

Cedar Financial follows a performance-based fee structure. This means:

No Upfront Fees: Clients are not required to pay any upfront costs.
Commission-Based: Fees are only charged once the debt is successfully collected.
Customized Rates: The commission rate may vary depending on the complexity and size of the debt.

Pros and Cons

Pros	Cons
Performance-Based Fees: No fees unless debt is collected.	Complex Cases: Variable commission rates for complex or larger debts.
Global Reach: Ability to handle both domestic and international collections.	Limited Pricing Transparency: Detailed pricing information not readily available on the website.
Consumer-Centered: Focus on maintaining positive relationships with debtors.
Industry Expertise: Specialized knowledge in sectors like education and healthcare.

Also Read: Self-Analysis Questionnaire for Personal Inventory [Unlock Your Potential]

6. The Kaplan Group

When it comes to finding the best collection agency for small businesses, The Kaplan Group stands out. Founded in 1991, they have established themselves as a leader in the commercial collections industry. Let’s explore the services they offer, their cost structure, the pros and cons, and how to get in touch.

Services Offered

The Kaplan Group provides a wide array of services tailored to meet the needs of small businesses. Here’s a detailed look at what they offer:

Debt Collection: The Kaplan Group specializes in business-to-business debt collection, handling cases across all states and internationally. They have a dedicated team of debt collectors and an in-house law firm for specialized cases, ensuring a professional approach to every collection effort.
Consulting Services: They offer customized seminars on commercial collections and credit management training. This is particularly beneficial for corporate clients looking to enhance their internal credit and collection processes.
Financial and Operational Advice: The Kaplan Group assists in major corporate transactions, including mergers, acquisitions, and intellectual property licensing. This service can be crucial for businesses undergoing significant transitions and needing expert guidance.

Cost & Pricing

Understanding the cost structure of The Kaplan Group is essential for any small business considering their services. Here’s a breakdown:

Over $500,000: 10% contingency fee
$50,000 to $500,000: 15% contingency fee
$5,000 to $50,000: 20% contingency fee
$1,000 to $5,000: 25% contingency fee
Debtor Outside USA: 30% contingency fee

Pros and Cons

Pros	Cons
High Success Rate: 85% on viable claims	Higher Fees for Small Debts: Steep contingency fees for smaller debts.
Comprehensive Services: Full suite from debt collection to consulting and financial advice.	Focus on Large Claims: Primarily deals with claims of at least $10,000, excluding some small businesses.
No Upfront Fees: Businesses pay only upon successful debt collection, reducing financial risk.

Conclusion

Debt collection agencies can be daunting, but finding the best collection agency for small business is crucial for financial health. Each agency offers unique services, cost structures, and benefits. By assessing these factors, you can ensure optimal recovery rates and maintain positive client relationships.

The right agency can significantly impact your business’s cash flow and overall success. sFor more insights on small business solutions, explore our other blogs and empower your business journey today!