Credit control software chases invoices for you while the customer still answers, for a flat monthly fee. A debt collection agency takes over once contact has stopped, usually after 90 days, and keeps a share of what it recovers. Most businesses need software first and an agency only for the few undisputed debts that software cannot move.
One customer has gone quiet on a £5,000 invoice that is now three months late. Your reminders went unanswered, and you are weighing whether to keep chasing or hand it over. Here is how the two routes differ, what each costs on that invoice, and how credit control tools pass a debt to a collector.
What is the difference between credit control software and a debt collection agency?
Credit control software automates your own chasing under your name, while a debt collection agency is a third party that chases on your behalf once you hand the debt over.
| Point | Credit control software | Debt collection agency |
|---|---|---|
| Who chases | You, through automated reminders, statements and calls | The agency's own staff, in its name |
| When it starts | Before the due date, on every invoice | After you hand a specific debt over, often past 90 days |
| How you pay | A monthly subscription, whatever is collected | A commission on what it recovers, sometimes with fixed fees |
| Disputed invoices | Paused while you sort the dispute | Usually refused until the dispute is settled |
| Legal steps | A letter before action at most, depending on the tool | Letters, tracing and, through a solicitor, court action |
When should you hand an invoice to a debt collection agency?
An invoice should go to a debt collection agency when it is undisputed, your own reminders and a final letter have gone unanswered, and the customer has stopped responding, which is commonly around 90 days overdue.
| Days overdue | Common step | Who runs it |
|---|---|---|
| Before the due date to 30 | Reminders and a statement | Credit control software |
| 30 to 60 | Calls, a late fee or statutory interest where your terms allow | Software plus your team |
| 60 to 90 | A final demand or letter before action with a deadline | Your team or a solicitor |
| 90 and over | Hand over if the debt is undisputed and the customer has stopped replying | Agency or solicitor |
Keep a debt in-house if it is disputed, if the customer is keeping to a payment plan, or if the account matters more than one invoice. An agency also needs your paper trail: the invoice, the terms, and every reminder sent.
How much does a debt collection agency cost compared with credit control software?
A debt collection agency usually keeps a commission of between 10% and 50% of what it recovers, while credit control software costs a fixed monthly fee for every invoice it chases.
Commission ranges differ by source and country. CreditorWatch puts agency commission at 10% to 50% of the amount collected. Upflow cites the US Chamber of Commerce at 25% to 50%. ezyCollect's collection partners start at 25%. Some agencies add fixed fees for legal action or tracing.
| Route on a £5,000 invoice | What it costs | What you keep if it is paid |
|---|---|---|
| Agency at 10% commission | £500 | £4,500 |
| Agency at 25% commission | £1,250 | £3,750 |
| Agency at 50% commission | £2,500 | £2,500 |
| Paidnice Essentials, one month | £49 (US$69), for up to 150 invoices | £5,000 |
| Chaser Compact, one month | £199, for turnover under £4m | £5,000 |
Commission is worked on the full £5,000. A subscription covers every invoice in the month, not one debt. Software prices are each vendor's published entry price.
The two are not true alternatives on the same invoice. Software works while the customer still pays attention; an agency works on the debts software did not move. The credit control software pricing guide sets out what each tool's price grows with.
What can a UK business claim before it uses an agency?
A UK business can add statutory interest, a fixed compensation sum and reasonable recovery costs to a late business invoice under the Late Payment of Commercial Debts (Interest) Act, before any agency is involved.
- Interest: 8% plus the Bank of England base rate for business-to-business debts.
- Fixed sum: £40 on a debt under £1,000, £70 from £1,000 to £9,999.99, and £100 from £10,000.
- Recovery costs: reasonable costs each time you try to recover the debt, on top of the fixed sum.
- Court: a claim up to £10,000 normally goes to the small claims track. The court fee on a claim of £3,000.01 to £5,000 is £205, and £455 from £5,000.01 to £10,000.
The UK late payment fees guide covers how to add these charges to an invoice.
Which credit control tools can hand an overdue invoice to a collector?
Credit control tools that hand an overdue invoice to a collector include Paidnice, Chaser, CreditorWatch Collect, ezyCollect, Kolleno and Satago, each through a different route and fee basis.
| Tool | How it hands a debt over | Fees and rules the vendor states |
|---|---|---|
| 1. Paidnice | An escalation step routes a case to any collection agency, solicitor or partner, in any country; escalations can also be a call, a template legal letter or a credit stop | A solicitor-signed letter before action is charged case by case, by country |
| 2. Chaser | Integrated collections with its partner Debitura (Chaser factsheet) | Success-based fees only; invoices from $100 can be escalated |
| 3. CreditorWatch Collect | One-click handoff to partner agencies in Australia, New Zealand, the UK and the US | Commission only if the debt is recovered; the debt should be over $500, undisputed and generally under two years old |
| 4. ezyCollect | Referral to named partners in Australia, New Zealand and the US (ezyCollect help centre) | A partner demand letter at A$49 plus GST; commission from 25% of the amount collected |
| 5. Kolleno | Partnership with Atradius Collections (Kolleno announcement) | No fee unless the debt is collected; rates not stated |
| 6. Satago | Partner page names Hilton-Baird in the UK (Satago partner page) | Typically no win, no fee, with reduced rates for Satago clients |
| 7. Upflow | No collection partner named | Not stated |
| 8. Credit Hound | No agency handover stated on its Sage listing | Not stated |
How this comparison was put together
This comparison uses government and court pages for the rules, and each vendor's own pages for how its tool hands a debt over.
| What we checked | Where the evidence came from |
|---|---|
| UK interest, compensation and court fees | gov.uk and the Civil Procedure Rules at justice.gov.uk |
| Agency commission | Published figures from named sources, each shown with its source rather than as one range |
| Tool handoff, partner and fees | Each vendor's help centre, partner pages and factsheets |
| Rules on who may collect | The FTC, the CFPB and ASIC |
A figure that appeared only in a search summary, without a page we could open, is left out.
Who regulates debt collection on business invoices?
Debt collection on business invoices is lightly regulated compared with consumer debt, though the rules differ by country and some apply to you as well as to an agency.
- United States: the FTC states that business debts are not covered by the Fair Debt Collection Practices Act, which applies to personal, family and household debts.
- Australia: the ACCC and ASIC debt collection guideline applies to creditors who collect their own debts as well as to agencies.
- United Kingdom: ask any agency you use whether it is authorised by the FCA and a member of the Credit Services Association before you hand over a debt.
Will a debt collection agency damage the customer relationship?
A debt collection agency changes the customer relationship because a third party now speaks for you, so most businesses use one only once they no longer expect to trade with that customer.
We found no trade body survey that measures how often customers stop trading after a handover. Upflow, a vendor, argues that sending an account to collections tells the customer the relationship has broken down. Keep accounts you want to keep on your own chasing, with a payment plan if the customer needs one.
What do businesses ask before handing a debt to an agency?
Is credit control software cheaper than a debt collection agency?
Credit control software is cheaper per invoice for routine chasing: Paidnice starts at £49 (US$69) a month and Chaser at £199 for every invoice in the month. An agency's commission of 10% to 50% applies to one debt at a time, so it only costs less on a debt you would otherwise write off.
How many days overdue before a debt collection agency?
Around 90 days overdue is the common point to consider an agency, once the debt is undisputed, a final letter has gone unanswered and the customer has stopped replying. Before that, reminders, calls, statutory interest and a letter before action usually cost less.
Can credit control software send a debt to a collection agency for me?
Yes, several tools can. Paidnice routes an escalation to any agency, solicitor or partner, Chaser works with Debitura, CreditorWatch Collect and ezyCollect refer to partner agencies, and Kolleno partners with Atradius Collections. Check the fee basis before you switch the step on.
Do debt collection agencies charge if they recover nothing?
Many work on no win, no fee: the partners named by Chaser, CreditorWatch Collect, Kolleno and Satago state success-based or contingency fees. Some agencies charge fixed fees for steps such as a demand letter, tracing or legal action, so ask for the fee schedule in writing.
Can I add late payment interest before using an agency in the UK?
Yes. Under the Late Payment of Commercial Debts (Interest) Act you can add interest at 8% plus the Bank of England base rate, a fixed sum of £40, £70 or £100 by debt size, and reasonable recovery costs to a late business invoice.
Which credit control software should I choose before I need an agency?
Choose the tool that fits your ledger and how many invoices you raise, so fewer debts ever reach 90 days. The best credit control software guide compares six tools on price, late fees, credit checks and limits.
For the six main credit control tools side by side, with prices, free trials and the main limit of each, see the credit control software comparison.
Sources
13 sources
- CreditorWatch creditorwatch.com.au/blog/fees-for-debt-collection-how-mu...
- Upflow upflow.io/blog/ar-collections/collections-agency-is-not-t...
- ezyCollect's collection partners help.ezycollect.com.au/en/articles/435203-debt-collection...
- 8% plus the Bank of England base rate gov.uk/late-commercial-payments-interest-debt-recovery/ch...
- £40 on a debt under £1,000, £70 from £1,000 to £9,999.99, and £100 from £10,000 gov.uk/late-commercial-payments-interest-debt-recovery/cl...
- small claims track justice.gov.uk/courts/procedure-rules/civil/rules/part26
- court fee gov.uk/make-court-claim-for-money/fees
- Chaser factsheet chaserhq.com/hubfs/MA-202607-Collections%20campaign%20fac...
- partner agencies creditorwatchcollect.com.au/collect
- Kolleno announcement kolleno.com/kolleno-partners-with-atradius-to-further-enh...
- Satago partner page satago.com/post/partner/hilton-baird
- FTC consumer.ftc.gov/articles/debt-collection-faqs
- ACCC and ASIC debt collection guideline asic.gov.au/regulatory-resources/find-a-document/regulato...
