Best Outsource Debt Collection Services for 2025

Even with the most streamlined and automated A/R management process and B2B collections best practices, customers don’t always pay on time. This could be due to many factors, including financial issues, unclear and inflexible payment terms, unresolved disputes, or simply being distracted by many other invoices being processed simultaneously.

Regardless of the reason, typically once your unpaid or overdue invoice is more than 90 days overdue, however, it has evolved to become a debt. At this point, your business should move from handling the invoice in-house to treating it as a serious debt. There are many outsource collection agencies that can help you manage this and there are several debt collection outsourcing services listed below.

The Evolution of Debt Recovery

Debt collection agencies gained more popularity and use in the early part of the 20th century. It is an industry that is expected to reach $16.7 billion by 2025 in the U.S. alone. The evolution of digital technology and its application for various automated and data-driven technologies, including skip tracing, asset tracing and credit reporting, has helped them become more successful at collecting debt. In addition, global expansion of debts and regulations have caused the industry to become highly specialized and rely on professionals with specific expertise.

Benefits of Outsourcing Debt Collection

Outsourcing collections offers businesses several advantages. It allows companies to focus on their core operations while entrusting complex and time-consuming debt recovery processes to experienced professionals. By partnering with an outsource collection agency, businesses can improve recovery rates, reduce the strain on in-house teams, and maintain compliance with ever-evolving regulations. Furthermore, agencies often have access to advanced tools and technologies, enabling them to locate and communicate with debtors more effectively.

The Disadvantages of Outsourcing Debt Collection

While outsourcing debt collection offers significant benefits, it also comes with certain drawbacks that businesses must consider. One primary disadvantage is the potential loss of control over customer relationships. Debt collection agencies may use practices that conflict with a company’s values or damage its reputation. Additionally, businesses may experience reduced visibility into the collection process, making it harder to track performance and address concerns. Outsourcing can also result in higher costs, particularly when agencies charge fees or commissions based on recovered debts. Furthermore, relying on external agencies may limit the opportunity to build internal expertise in accounts receivable management.

5 Key Players in Debt Collection Outsourcing

Debt collection outsourcing services are responsible for collecting debt from your customers, which they all do in exchange for various fees. The most credible services are regulated under the Fair Debt Collection Practices Act to protect consumers against unethical collection practices.  Your selection of a service will depend on its expertise, its approach to debt collection, and familiarization with legal processes and regulations in your industry.

Top debt collection outsourcing services include:

Fair Capital

Fair Capital focuses on consumer, commercial, and healthcare debt and boasts one of the highest success rates in the industry. It has a “no money, no fee” approach to collections. Its experienced PCS debt collectors are knowledgeable of relevant regulations such as HIPAA and legal processes necessary to recover debt.

Summit A/R

Summit A/R focuses on debt collections for small businesses that include the consumer, educational, dental, and medical industries and focuses on preserving human dignity (PHD). Its rates range from 7% to 50% but are negotiable. It doesn’t encourage submitting debts that are more than two years old, however.

IC System

With more than 80 years of experience, IC System has proven experience in collecting debt from small businesses in a wide range of industries. It has a two-tiered program for debt collection, one with an approach that sends demand letters and lets customers keep 100% of the payment. IC System’s more aggressive approach works with the credit bureaus and has a 25% fee.

Rocket Receivables

Rocket Receivables is one of the most affordable debt collection agencies, offering fixed-rate pricing for small business debt collections. It has collected $6 billion in debt from a range of industries, including medical, education, retail, trades, and professional services.

Atradius Collections

Atradius is a global debt collection agency, with a network of experienced professionals worldwide to collect your debts wherever they are located. It offers a range of services that includes accounts receivable collections, debt collection, legal services, and insolvency services.

Emerging Trends in Debt Collection Outsourcing for 2025

Since a debt collection outsourcing agency needs to work with customers who already have strained relations with a business, they must provide outstanding customer service. This includes working closely with the customer to create flexible payment plans, offering different payment options, and effectively communicating the debt collection process to customers.

Other debt collection outsourcing trends include:

• Increasingly technology-driven. Automation, artificial intelligence, machine learning, robotic process automation (RBA), dating mining, and advanced data analytics can all be applied to debt collection. Adapting these elements of autonomous finance helps deliver enhanced customer service, better efficiency, and productivity, and gives your company a competitive advantage.
• More non-traditional payment options. Digital wallets (e.g., PayPal, Amazon Pay, Google Pay, Apple Pay) payment processors, Automated Clearing House (ACH) payments, and bank transfers are becoming more convenient and secure options for customers.
• Global debt collection. Collecting debt presents challenges in complying with various regulations, not to mention cultural and language barriers. Outsourcing debt collection to a third-party agency can be the most optimal way to communicate with these customers and adhere to the relevant regulations.

Is Debt Collection Outsourcing Good for Your Company?

Before your business looks at outsourcing debt collection to a third party, it should consider the disadvantages that come along with it. This includes giving up control of part of your customer relationships, lack of visibility of the process, and the inability to track and measure A/R performance. However, your business may reach a point where it feels that it lacks the resources and experience to handle debt collection in-house.

Here are a few signs to watch out for:

• Continuous collection delays with aging buckets. Aging buckets are ideal for identifying and categorizing unpaid and overdue invoices, but the longer the invoices are outstanding, the lower the likelihood that the customer will pay. At this point, it may not be worth the effort.
• Customer debt is rising. Once overdue and unpaid invoices are increasing in relation to your collection rate, it can take more resources to collect them, especially if your business relies on manual processes that are inefficient and prone to error.
• Increasing complexity. Collecting customer debt is a specialized skill that goes beyond collecting invoices. Your collections team may not have experience with global debt collection, or understand the legal implications and compliance with relevant regulations involved with certain types of debt.
• Misallocation of time and resources.  If you feel that your business is devoting most of its time to debt collection instead of focusing on investment in its long-term business goals, it’s probably time to consider outsourcing your debt collection to a third party. This can make your internal A/R process more efficient and save costs.

How Gaviti Helps Ensure Timely Payments

Gaviti’s invoice-to-cash A/R management and automation solution helps your business proactively manage receivables and facilitate the timely payment of invoices. It does this while keeping your customer relationships and A/R process in-house and maintaining visibility over the A/R process and team performance.

In addition, it includes:

• Credit Monitoring and Management. Send automated credit applications to customers and set credit limits based on analytics it collects to determine creditworthiness and customer risk. Extending credit to non-creditworthy customers increases the risk of customer debt.
• Collections Analytics. Gain greater visibility into A/R performance on both an individual and team level that includes not only Day Sales Outstanding (DSO) and collection rate but also customized KPIs. Foster greater collaboration with the necessary stakeholders in A/R and finance but also business development, procurement, logistics, sales and marketing to address any issues in collections before they become harder to solve.
• Self-Service Payment Gateway. Offer customers the latest and most secure payment options that include mobile wallets such as Google and Apple Pay, ACH transfers, and payment processors such as Bluesnap and Stripe in addition to credit card and check payments. More payment options increase the likelihood that a customer will pay on time.
• Cash Application. Automate reconciliation through remittance-based matching. Manage cash from multiple banks, accurately matching payments with invoices to ensure improved visibility into your cash position. Accurate accounts free up your A/R resources from having to resolve disputes or verify deductions.
• Dispute Management and Deductions. Track, code, route and resolve customer disputes by documenting information such as relevant documents, reasons for the dispute, and communication with the customer and centralizing it into one single point. A streamlined approach to disputes resolves them faster and is a quick way to improve your cash flow.

Want to learn more about how you can help ensure timely payments from your customers? Contact us and Speak to a Specialist.

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