The Best Collection Agency Services of 2020

Skye Schooley
, writer
| Updated
May 19, 2020
Image Credit: AndreyPopov / Getty Images

Update: This page has been updated to include information on a study that shows a significant increase in debt collectors using the legal system to help them collect what they are owed.

If you are struggling with difficult clients and have consumer or commercial accounts that need to be collected on, hiring a collection agency may be the right move. But how do you know which agency to choose? Collection agencies can vary by industry, collection type (business-to-consumer or business-to-business), collection tactics, locations served and more. The best agencies use current law-abiding collection technologies, mobile-friendly websites and online portals to interact with your clients. Many agencies can also provide skip tracing and litigation. To help you find the best collection agency in 2020, we evaluated the top debt collection agencies in America. 

Best Picks

Prestige Services Inc.
Prestige Services Inc.
Best B2B Collection Agency


Editor's note: Looking for a collections agency to help your business recover customer debt? Fill out the questionnaire below and we will connect you with vendors that can help.

What to Expect in 2020

In 2020, the state of the collection agency industry is expected to evolve in more ways than one. With the increase in the cost of payroll and decrease in commission rates, many agencies are struggling to stay afloat. This leaves room for several acquisitions, mergers and closures. To stay competitive, many agencies are diversifying the types of debt they collect. This will benefit businesses that are owed more than one debt type.    

Federal rules and regulations regarding the collection industry are tightening as well. Business owners need to be attentive to the changes to ensure the collection agency they've hired is adhering to current laws and regulations.  

In late 2019, the U.S. Court of Appeals' ruling against the Consumer Financial Protection Bureau made it illegal for agencies to send pertinent consumer collections information through indirect electronic means, like hyperlinks. When contacting consumers, debt collectors are legally required to clearly disclose who they are, on whose behalf they are collecting and how much money is owed. 

April 2020: As the coronavirus pandemic wears on, both federal and state governments are questioning how much work collection agencies should be doing to collect payments. At the federal level, Ohio Sen. Sherrod Brown has introduced an amendment to the Fair Debt Collection Practices Act to provide consumers some relief from collection agencies during major disasters, such as the current pandemic. If passed, the bill would limit the amount of work collection agencies could do to collect payments.

Some states are taking matters into their own hands. For example, Massachusetts has banned debt collectors from making collection calls, filing new collection lawsuits, garnishing wages or properties, and repossessing vehicles for three months or until the state of emergency is over. In Illinois, the Department of Financial and Professional Regulation is urging collection agencies to work with consumers to create accommodating payment schedules or eliminate collection for 60 days.

May 2020: In addition to phone calls, debt collection agencies are turning to courts to help them collect on past-due funds. The Pew Charitable Trusts reports that over the past decade, collections suits rose from 1.7 million to 4 million, and debt lawsuits increased from 1 in 9 civil cases to 1 in 4 by 2013. The Consumer Financial Protection Bureau found that 15% of Americans said they were sued by a debt collector.

As more debt collection agencies seek out new ways to collect the funds they are owed, it is reasonable to expect that this wave of lawsuits, which appears to be working for collection agencies, will not only continue but increase.


Hiring a Collection Agency

There are multiple stages of debt collection, and the first stage starts with you, the business owner. Before hiring a collection agency, you should evaluate your debtor's situation. Take notes on how many days overdue their payments are, how much they owe you and how much you are willing to settle for. Keep in mind that the longer you wait to collect debt, the harder it becomes to collect.

When you begin to speak with your debtor, maintain good customer service and keep phone calls short to avoid harassing them. After all, they may still be a customer of yours, and you may need to keep a cordial working relationship. If they remain unresponsive to your outreach attempts, the next step is to send them a formal demand for payment. This is a written document that outlines the debt owed in detail. This letter is typically effective in resolving debt issues. A formal demand letter is also useful in the case of filing a lawsuit, and it is sometimes legally required. 

If you are unable to resolve the debt collection process on your own, such as by phone or formal demand letter, you may find yourself looking into the next stage, analyzing the benefits of hiring a debt collection agency. Agencies can let your nonpaying party know you mean business.

The cost of hiring a collection agency varies, although the price structure is typically either percentage-based or a flat fee. When looking for an agency, do thorough research to verify that the company is legitimate and accredited, has positive ratings, and abides by laws like the Fair Debt Collection Practices Act.

October 2019: Another thing you may want to ask the collection agency is how it plans to handle the Consumer Financial Protection Bureau's proposal about allowing digital recovery notices. In 2019, the U.S. Court of Appeals ruled against the CFPB's attempt to permit debt collection agencies to send collection notices to consumers by digital means (e.g., hyperlinks, emails and text messages). Some agencies may not be in compliance with these regulations, which could land your business in hot water if you work with them.

November 2019: According to recent reports, the number of top-level collection agencies is slimming down. This can be great for you as a consumer, as it means better options available. However, with the increase of legal demands, mergers, closures and acquisitions, it may be beneficial for you to pay extra attention to the reputation and resistance of the collection agency you are considering hiring. This can help to ensure you choose an agency that will be around long enough to resolve any long-term collections you may need.  

After narrowing your search down to a few credible agencies that serve your industry and location, compare important features like skip tracing, litigation, demand letters, pre-collection and free final-notice forms. The last step is hiring the agency of your choice. The best agencies allow you to add your accounts directly through a simple online portal.

Collection Agency Pricing and Negotiation

Although we did find a collection agency that offers fixed pricing, most agencies charge a fee based on a percentage of the collected debt. Typically, fees range from 20% to 50%. However, many factors determine the fees, such as the size of the debt portfolio, the work required to obtain the debt, the age of the account and whether attorneys need to get involved.

Commercial debt is typically less expensive to recover and averages between a 20% and 25% collection rate. Consumer debt costs a little more to recover and averages a collection rate from 30% to 50%. Volume discounts are often applicable for each.

Most collection companies use contingency pricing, which means they do not charge you until after they collect on your debt. This gives many consumers peace of mind. In addition to the basic per-account fee, litigation and court fees may apply.

On average, the longer your accounts remain delinquent, the lower the average success rate of debt recovery. Collection agencies are most successful at recovering debt from accounts that are 60 to 90 days delinquent.

Here is a breakdown of the costs of each of our best picks:

  • Summit Account Resolution: Rates are 7.5% to 50% of each account, with a $50 minimum to be collected. We were quoted a consumer rate of 35% and a slightly lower commercial rate. Litigation fees are additional, and rates are contingent.
  • Prestige Services Inc.: Rates are typically 25% for accounts from $200 to $3,000, and 22% for accounts from $3,000.01 to $20,000. We were quoted an 18% rate for 10 accounts of $5,000 each. Litigation fees are additional, rising to 40%. There is a $200 minimum collection, and rates are contingent.
  • Rozlin Financial Group Inc.: Rates are contingent and based on the amount of each account. It requires a minimum of five accounts. Litigation fees are additional.

When trying to determine the cost of collection agency services for your delinquent accounts, factor in any minimum requirements and additional litigation fees the collection agency may require. Be sure to inquire about all costs when discussing pricing.

Before registering your delinquent accounts with a collection agency, you can ask the company several questions to get the best deal possible:

  • Does it charge fees aside from the standard account percentage?
  • Does it offer discounts based on a large volume of accounts or large collection amounts?
  • Does it offer additional features or discounts for continual, forward-flowing companies?
  • Does it offer volume discounts for litigation?

Although some collection agencies require contracts, many allow you to cancel your accounts at any time, as long as no debt has already been collected. Termination fees may apply.  

Our Methodology

To find the best collection agency for small businesses, we started by listing vendors that appear on reputable online sources, such as review and business websites. We also conducted our own research into the industry to find others. In total, we examined more than 30 collection agencies. 

We narrowed down the list based on different use cases and the criteria listed below. Our research included reviewing each provider's website and comparing services and prices, as well as studying user reviews. We posed as business owners and contacted customer service and sales representatives to better understand the quality of service and learn further information we couldn't find online. 

We eventually cut our list down to 17 contenders for our best picks: Account Management Systems; Alexander Miller & Associates; Aspen National Collections; Benjamin Michael & Associates Inc.; Credit Management Company; Martini, Hughes & Grossman; National Service Bureau; Prestige Services Inc.; Rapid Recovery Solutions; Rocket Receivables; Rozlin Financial Group; Summit Account Resolution; The Kaplan Group; Tucker, Albin & Associates; Vengroff Williams Inc.; and Your Collection Solution.

We based our final decisions on these factors:

  • Rates and contracts 
  • Service limitation 
  • Skip-tracing services 
  • Litigation services 
  • Reporting
  • Online features  
  • Locations services available 
  • Industries served 
  • Customer service 
  • Better Business Bureau ratings and accreditations 
  • Customer reviews and complaints

Frequently Asked Collection Agency Questions

Q: Why should you prioritize outsourcing your collections?

A: When you have delinquent accounts, debtors might ignore your acquisition attempts and refuse payment. While you can make calls and send demand letters, collection agencies have advanced tactics to retrieve your money.

The longer debts go unpaid, the less likely they are to be repaid. If you prioritize outsourcing your collections to the proper agency as soon as possible, you have a higher chance of receiving the full amount of money.

Q: What is the average collection rate for a collection agency?

A: The cost of hiring a collection agency varies. Agencies typically charge a percentage fee based on the type of collection (commercial or consumer), the amount of debt to be collected and the volume of business you provide.

Some agencies charge a flat fee; however, most charge a contingency percentage rate of 20% to 50%. Depending on the amount of debt you need recovered, commercial debt collection fees are typically 20% to 25% of the sums collected, and consumer debt collection fees are typically 30% to 50% of the sums collected.

If your case goes to court, expect to pay additional legal fees and court disbursements. Your agency will notify you before taking your cases to court, giving you the option to accept or decline. Most agency fees, including litigation, are typically charged after your debts are recovered.

Q: How long can a collection agency attempt to collect a debt?

A: While some collection agencies also operate as billing companies, most begin to collect on accounts that are 60 to 90 days past due. The longer you wait to collect on a debt, the harder it will be to recover the full amount. Since the money agencies receive often depend on how much they collect, they focus on collecting as much money as they can over the shortest period of time. Each state has a statute of limitations, which restricts the length of time a debt can be collected. In most cases, states allow collection agencies to pursue debtors for 4-6 years after the last active payment on the account.

What to Look for in a Collection Agency

There are multiple factors to consider when deciding which debt collections agency is right for you. These are the main ones.

Skip Tracing and Litigation

Collection agencies have various techniques and processes to recover debt from delinquent accounts. Most agencies offer skip tracing, a method of tracking down hard-to-find people, including those who have skipped town to avoid paying their debts. Formal demand letters are generally the first step of contact and can be very effective. Most services send two or three letters before taking further action. If these means of requesting payments are unsuccessful, many agencies offer litigation services should you decide to pursue legal action against your debtor. The best services typically don't charge you until they recover your funds. 

Online Client Portal and Status Updates

When you select a collection agency, it's important to make sure it has all the features your company needs to recover money from delinquent accounts. A useful feature is an online system with a client portal and status updates. Most services have this feature, which is beneficial for receiving live status updates on the company's progress toward recovering your money. 

Location Capabilities

If your business has international sales and accounts, you will need a service that offers foreign collections. Most companies post their location availabilities online; however, you may want to call a customer service representative to be sure your international accounts qualify for the services.

Agency Complaints, Reviews and Reputation

Debt collection can be a sensitive subject; therefore, you'll want to look at a collection agency's reputation. The way it treats your debtors reflects directly on your company, either positively or negatively. While we considered the reputation, complaints and reviews of the services we analyzed, we recommend you conduct further research on any company you're considering. 

Customer Service

You want to find a company that is proactive and quick to respond to any inquiries you have, and one that you can easily contact when you need to. Testimonials are helpful for researching a company's reputation; it speaks volumes when a company can show many satisfied clients.  

Honesty and Human Dignity

You'll want a service that is reputable and honest – one that fights to recover your funds without tarnishing the good name of your company. Most services offer similar features, so the way they execute those features and services should be the deciding factor when you choose a company to recover the funds you've earned. 

Downloadable Guides

Ever wonder how you can take your collections performance to the top?
Ever wonder how you can take your collections performance to the top?

Learn how analytics boost collection revenue. Five ways to increase your collections effectiveness. Read More

Download Now

Traditional approaches are less and less effective. New techniques are proving to produce much higher ROI for collections time, effort and expense despite the shifting ground of economic, regulatory and social change.

Using multi-channel strategies, whether mobile applications, voice, SMS, web or email – along with advanced analytics can help you connect and collect at the right time with the right approaches. Allowing consumers to select their preferred channel is a best practice strategy for collection and recovery. In fact, one bank used automation to collect 51% more debt than its current call center—at an even lower cost than an offshore alternative. 

Executive Brief:
Executive Brief:

Four Steps to Smart Automation in Collection and Recovery


Automating accounts receivable management streamlines processes, accelerates production ef ciencies and improves accuracy. It’s essential to collection and recovery success.

Learn more about a complete, end-to-end solution for debt management and automating decisions from predelinquency to resolution metrics.

This Executive Brief outlines the dramatic improvements technology automation brings to the collection and recovery of debt.

Unlocking New Doors to Collection Success
Unlocking New Doors to Collection Success

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Collections organizations worldwide struggle to keep pace with their highly mobile customers and their rapidly changing payment priorities. Now, automated multi-channel systems, sophisticated analytics and personalized approaches are putting creditors, agencies, health care organizations and other businesses a step ahead- achieving impressive incremental gains in revenue, reducing costs and greatly reducing customer discomfort about late payments (and thereby increasing their willingness to pay). Discover the trade secrets and best of class solutions that are hitting home with today's fast-moving collection targets.

Download today and learn more!

How Mobile Communications Can Improve Collections
How Mobile Communications Can Improve Collections

Download Now

According to a report from Juniper Research, the number of mobile banking users worldwide will reach 530 million by 2013, up from about 300 million in 2011. For banks, this creates new options for mobile communication and interaction with customers, while reducing the load on their call centers.

The opportunity is particularly compelling in collections for a simple reason: Many people do not like dealing with collection agents. Mobile communications allows customers to bring their payments up to date without dealing with an agent or receiving embarrassing phone calls, making this channel far more effective than traditional methods.

Download today and learn more!

Case Study:
Case Study:

Toyota Financial Services optimises collections treatments with a customer-centric approach


Toyota uses analytics to keep delinquent customers in their cars Ever wonder how to reduce auto loan delinquencies and repossessions by providing payment options that are pro table to the business and address customer preferences?

Toyota Financial Services turned to a collections treatment solution powered by FICO® Xpress Optimisation Suite and FICO® Model Builder to infuse statistical and predictive modeling, forecasting, advanced segmentation and optimization into a single framework to simulate multiple scenarios and deploy the optimal strategy into production. The bottom line was quick ROI that kept thousands of customers in their cars and allowed TFS to grow their portfolio without adding collections headcount.

Common Collection Agency Service Questions & Answers

Have a collection agency service question of your own?

I'm going to assume you've already set up payment parameters. I like the suggestions of payment upon receipt with a service fee for 1-15 days and a larger fee for anything after. At this point, you are probably at the point of pulling your hair out with either chronically late payers, businesses with cash flow problems, or someone (call me cynical) taking advantage of you. For these already in motion, consider making sure you have excellent merchant services rates (make sure you have...

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Hi Lamar, I also have a business that deals with residential customers. I agree with David: if you can't get them to pay on time, then you won't ever be able to collect a penalty, no matter how carefully you spell it out ahead of time. We require payment at the time of service (they can put it on a credit card). Still, sometimes people aren't there so we call them to remind them that they owe and that we expect to collect the next time. If they aren't there the next time then no...

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I would recommend keeping a deposit or retainer on file in the form of a time block, or other "prepaid" service. With the payment history, you have the justification in that their credit record is not established at this point to support billing in arrears. When the account on file reaches a minimum balance, you can request that it be replenished. This way, instead of continually running after funds, you have an established credit policy, funds on file, and can forward time or service...

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Companies evaluate the time-value of their money and have a certain percentage in mind that helps them determine which invoices to pay. It is likely that number is less than 5%. For example, some companies will pay on time for 2% net 20, but still others simply want to pay net 60 no matter what. Having a good relationship with your client can help you ask the right questions to determine what will motivate them to pay on time. In one case, I had a candid conversation with my client and...

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Diane, its been my experience that when a client starts to feel that a service they are paying for does not have the value they expected, they tend to think that they can get away with not paying. I do lots of business long distance and have never had a client not pay becasue they were in Canada and I am in So. Cal. Here are a few 'best practices' for insuring you get paid: 1. Make sure the client understands your billing practices. Explain it to them verbally in addition to putting...

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Hello Daniel ~ While I am not familiar with UK law, I will tell you that here in the States, having a signed contract is no guarantee of payment. The only time in my long career as an entrepreneur that I could not get final payment from a client, I HAD a signed contact! After numerous attempts, both by email and phone, I decided to turn the account over to a collection agency. They agreed to take the assignment, and I agreed to the 60/40 split (60% to me, 40% to them) when they recovered the...

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