How much does a collection agency charge to collect an invoice?
How much do collection agencies charge?
Short answer
Commercial collection agencies typically charge 25-50% contingency on what they actually collect, with most settling between 30-40% for invoices in the $1,000-$25,000 range. Smaller invoices carry higher percentages or minimum fees. Litigation-track accounts run higher, often 40-50% plus court costs. There is usually no charge if nothing is recovered, but expect setup minimums on some agencies.
Collection agency pricing follows a contingency model: the agency only earns when it recovers money. The percentage they keep depends on the size of the invoice, how aged it is, and whether the account moves to litigation.
For commercial invoices in the $1,000-$25,000 range, expect 30-40% contingency on amounts recovered. Below $1,000, many agencies will not engage at all because the labor cost exceeds their take; some have minimum fees of $50-$150 that effectively wipe out the recovery on small balances. Above $25,000, you can sometimes negotiate down to 15-25% on a flat-fee or sliding-scale arrangement.
Aging matters because it changes the agency's expected recovery rate. Invoices under 90 days past due typically run 25-30% contingency. Invoices over 180 days past due often run 40-50% because the agency expects to recover less and needs the higher cut to justify the work. Anything past 365 days frequently moves to a 'paper purchase' model where the agency buys the debt at a deep discount and collects on its own books.
Legal costs are separate. If the agency moves an account to litigation — typically required for invoices over $5,000 with a non-responsive debtor — court filing fees, process serving, and attorney costs come out of either the recovery or your pocket, depending on the contract. These can add up faster than the contingency itself on small judgments.
The structural difference between agency contingency and Syntharra's success-fee model: agencies engage at day 90 or later, by which point the recovery rate is already 25-30% in the best case, and they take 30-50% of that. Syntharra engages at day 3, when the recovery rate is 80-90%, and takes 10%. The math compounds in your favor when the work happens earlier and at a lower take rate.