How much do collection agencies charge?



How Much Does it Cost to Hire a Collection Agency?

standard debt collection fees

When hiring a debt collection agency, you will encounter two main fee structures: a contingency fee and a fixed rate.


It is essential to understand these fee arrangements to know what you are expected to pay.




Contingency Fee

Most debt collection agencies, Including Fair capital, use the contingency-based model, often referred to as "No Payment No Fee" collections.


A debt collection agency operating on a contingency fee will be entitled to its fee only after successfully collecting your debt.


For example, a landscaping company is owed $10,000 and hires a collection agency at a 25% contingency fee. Assuming the agency successfully retrieves the funds, they will be entitled to $2,500, and the landscaping company gets $7,500.




The Benefits of Contingency Fee Debt Collection

  1. Pay Only For Performance. The most significant advantage of using a contingency fee arrangement is that you don't have to worry about paying the collection agency unless they successfully retrieve your money.

  2. Maximum Results. You can rest assured that a contingency-based collection agency will give its utmost to your accounts. Because they don't get paid unless you get paid, the agency will be highly motivated to do everything in its power to bring you the best possible result. This may also provide some peace of mind–if a collection agency is willing to risk not collecting a fee for the work they put into things, you probably have a good chance of retrieving your debt.

  3. No Up-front Fees. An additional advantage of using a collection agency charging on a contingency basis is that you don't pay anything while your debt is still outstanding.


Factors that Impact collection cost

The average debt collection fee is typically between 20% to 35%. Several factors will impact how much a collection agency will charge. So let's break it down;

  • Age of account — Older debts are generally more complex to collect on, so they typically demand higher fees.

  • Average balance — Accounts with a small balance will generally face a higher collection fee because they hold a small profit to the agency.

  • Account volume — A collection agency will generally charge less; If you bring a large volume of accounts.

  • Account industry — Account industry— Because different Industries perform differently and require other tactics, some agencies will charge differently depending on the industry.


Flat Fee:

Now let's talk about flat-fee debt collection services.

With a flat fee, you get charged a fixed fee upfront—regardless of results, age, volume, industry, average balance, or any other variable.

The flat fee is generally $15 to $25 per account.

Choosing the right agency:

Passing your outstanding debts to a trusted debt collection agency allows you to focus time, energy and resources on production—and success!


Fair Capital delivers effective third-party collection services at affordable rates. If you're considering outsourcing your collections or looking for a new collections agency, drop us a line! We'd love to talk to you.

Collect Your Debt No Money No Fee

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