What is Collections?
Collections is the end of the line for an unpaid invoice — handing it to a collections agency or attorney after your own dunning failed. Agencies typically take 25–50% of what's recovered. It's a last resort: expensive, slow, and the end of the client relationship.
In practice
A $7,500 invoice sits unpaid 120 days despite three notices. The business assigns it to an agency, which recovers $6,000 and keeps $1,800.
Avoid collections entirely
Deposits, clear terms, and disciplined follow-up keep invoices out of collections.
Read the late-payments guideFrequently asked questions
When should I send an invoice to collections?
After your own dunning sequence fails — typically 90+ days overdue — and the amount justifies the 25–50% fee. Small balances often aren't worth it.
Will collections hurt my business reputation?
With that client, the relationship is over anyway. Done professionally through an agency, it rarely affects your broader reputation.
Can I still collect it myself after assigning to an agency?
Usually not — the agency contract typically gives them exclusive rights for a period. Decide before you sign.