Small Business Debt Recovery: How It Works

Late payments can bring any small business to a standstill. You’ve done the work, sent the invoice, chased it… and still nothing. The frustrating truth is that chasing overdue invoices can feel like a full-time job — and it often gets pushed aside for more urgent priorities.

If you're wondering how small business debt recovery actually works — and whether it’s worth getting help — this guide breaks it down in plain English.

When to Consider Debt Recovery

You don’t need to wait six months to take action. If a customer is ignoring reminders, making excuses, or has stopped communicating altogether, it could be time to bring in professional help.

As a general rule, if the invoice is:

• Over £500, and
• More than 30 days overdue,

you’re well within your rights to explore debt recovery. And the sooner you act, the better the chances of a successful outcome.

What Happens When You Instruct a Debt Collection Agency

Here’s how the process typically works:

1. You submit the details of the debt – This includes the debtor’s name, contact info, the amount owed, and any supporting documents (like the original invoice or contract).
2. The agency validates and reviews the case – They’ll check whether the debt is recoverable, and may offer additional services like debtor tracing if the person or company has disappeared.
3. Contact begins – This can include letters, phone calls, emails, or even doorstep visits — all handled professionally and in line with UK regulations.
4. The debt gets resolved — or escalated – Some debts are paid after the first letter. Others may need to be escalated to legal action or enforcement, which the agency will usually handle on your behalf if needed.

How Much Does It Cost?

Every debt collection agency has its own pricing structure — and it’s not always easy to compare like-for-like at first glance.

Some agencies charge upfront, while others only get paid if they recover your debt. Here are the most common approaches:

• No win, no fee – You don’t pay anything unless the agency recovers your money.
• No collection, no commission – Similar, but may include a small setup or admin fee.
• Upfront fixed fee – You pay a low flat rate at the start, and then a reduced commission if the debt is collected.

Some agencies also allow you to add late payment interest and recovery costs to the total debt, helping to cover fees where legally permitted.

💡 With so many options, using a platform like Collect Compare can help. We make it easy to view trusted, vetted agencies side-by-side — so you can choose one that fits your case and your budget.

Will It Affect My Relationship With the Customer?

It depends on the situation. But in many cases, debt collection can be handled discreetly and professionally, with a focus on resolution rather than confrontation.

Some customers simply need a formal nudge to take things seriously — especially if they’ve been ignoring your reminders. If future business is important, you can let the agency know and they’ll approach the case with that in mind.

Do I Need a Solicitor?

Not always. Many debts can be recovered without going down the legal route — and bringing in a solicitor too soon can be more expensive.

A good debt collection agency will only escalate the case to legal proceedings if it’s necessary — and they’ll advise you on the best course of action.

For straightforward cases, using a collection agency is often faster, more affordable, and more effective.

Need Help Getting Paid?

If you're owed over £500 and the debtor’s dragging their heels, we can help.

At Collect Compare, we make it simple to find a debt collection agency that fits your case — whether you want to compare options or be matched directly with a vetted expert.

Compare trusted debt recovery agencies now – it’s free, fast, and you stay in control.