By Chasing unpaid invoices or overdue debts can drain your time, energy, and finances. If polite reminders and internal efforts fail, it may be time to consider sending someone to collections. Whether you’re a small business owner, a freelancer, or a landlord, understanding how the debt collection process works is key to recovering money while protecting your business reputation.
This guide explains how to send someone to collections, what to expect from the process, and how to do it legally and professionally.
What Does It Mean to Send Someone to Collections?
Sending someone to collections means hiring a third-party collection agency to recover money owed to you. These agencies specialize in contacting debtors, negotiating payments, and—if necessary—escalating to legal action.
The collection agency will typically:
- Attempt to contact the debtor via phone, mail, or email
- Negotiate a repayment plan
- Report the debt to credit bureaus (if applicable)
- Take legal steps if payment isn’t made
Important: Collection agencies usually take a percentage of the recovered debt (20%–50%) as their fee.
When Should You Send a Debt to Collections?
| Trigger Event | Recommended Action |
| Invoice is over 90 days past due | Begin collections process |
| Customer ignores repeated follow-ups | Consider sending to collections |
| Payment arrangement was made but broken | Move to next step in recovery |
| Amount is significant and legally owed | Engage a collection agency |
Before sending someone to collections, exhaust internal methods such as:
- Payment reminders
- Final demand letter
- Offer of installment plan
- Discount for immediate settlement
How to Send Someone to Collections: Step-by-Step
Step 1: Gather Documentation
Before you contact a collection agency, make sure you have:
- Signed contracts or agreements
- Invoices or payment statements
- Copies of emails, letters, or call logs
- Terms of service or payment policies
These documents will prove the debt is legitimate and owed.
Step 2: Notify the Debtor One Final Time
Send a final written notice stating your intent to refer the matter to collections if payment isn’t received within a specified time (e.g., 10–14 days).
Include:
- The amount due
- Due date and original invoice number
- Statement of potential impact (e.g., credit damage)
- Clear deadline for payment
Pro Tip: Keep the tone professional, not threatening.
Step 3: Choose a Reputable Collection Agency
Not all agencies are equal. Research and select one that fits your industry, debt size, and legal requirements.
What to look for:
- Licensed and bonded agency
- Specialization in commercial or consumer debt
- Transparent fee structure (flat fee or commission)
- Positive client reviews and ethical standards
Popular collection agencies include:
- IC System
- TSI (Transworld Systems Inc.)
- Atradius Collections
- Rocket Receivables
- Local firms with industry-specific experience
Step 4: Submit the Account
Once selected, submit your debt portfolio to the agency. Most agencies will request:
- Debtor’s contact info (name, phone, address, email)
- Total amount owed
- Payment history and any partial payments
- Proof of debt (contracts, invoices, etc.)
From here, the agency will take over communications and recovery attempts.
Step 5: Monitor Results and Reports
Collection agencies typically update you on:
- Contact attempts and responses
- Payment arrangements made
- Recovered funds and amounts due to you
- Legal steps taken if debt remains unresolved
Many agencies provide online dashboards for real-time updates.
What Happens After Sending Someone to Collections?
| Outcome | What It Means |
| Debt is recovered | You receive payment minus the agency’s fee |
| Payment plan is set up | You receive regular installments while the agency monitors progress |
| No recovery | The agency may report the debt to credit bureaus or pursue legal action |
| Legal escalation | Some agencies offer court filing or attorney involvement for a fee |
Legal & Ethical Considerations
- Follow the Fair Debt Collection Practices Act (FDCPA) in the U.S.
- Ensure all debts are accurate and documented
- Don’t attempt to “blacklist” customers publicly—this can be illegal
- Avoid personal harassment; let professionals handle recovery ethically
Note: Debt collection laws vary by region. Always consult local legal advice if unsure.
SEO Keyword Strategy
| Keyword | Placement |
| How to send someone to collections | Title, meta, H1, intro, process steps |
| Sending someone to collections | Throughout body, FAQ, benefits section |
| Debt collection process | Definition, step-by-step guide |
| Small business unpaid invoice recovery | Introduction, benefits, final tips |
| When to use a collection agency | Step 2–3, table comparisons |
Internal linking suggestions:
- “How to write a final payment reminder letter”
- “Best invoicing software for small businesses”
- “Legal steps for debt recovery”
- “What is a collection agency and how do they work?”
Conclusion
Recovering unpaid debts doesn’t have to be stressful or confrontational. By learning how to send someone to collections the right way, you can reclaim lost revenue, protect your business, and maintain professionalism throughout the process.
Choose the right agency, document everything, and act promptly. The sooner you escalate unresolved payments, the better your chances of successful recovery.
FAQs
1. How much does it cost to send someone to collections?
Most agencies charge a commission fee of 20–50% of the amount collected. Some charge flat fees for small debts.
2. Can I send a customer to collections for a small amount?
Yes, but weigh the cost vs. potential recovery. Some agencies offer small debt collection packages for as low as $15–$30 per claim.
3. Will sending someone to collections hurt their credit?
Yes. Once reported, the debt can negatively affect a person’s credit score for up to 7 years.
4. Can I send a business to collections?
Absolutely. Many agencies specialize in B2B (business-to-business) debt collection.
5. What if the debtor disputes the debt?
The collection agency will typically pause activity and investigate the claim. If you have proper documentation, the process can continue.
Also read: Driver Log Book: What It Is, Why It Matters, and How to Fill One Out
