What Debt Collection Actually Costs (And What It Saves)

Write off a €100,000 invoice and your business absorbs the full loss, offset only by a tax deduction worth perhaps €20,000–€25,000 depending on your jurisdiction. Recover that same invoice through a professional collection agency at 10% commission and you net €90,000. The difference — €65,000–€70,000 — is the actual cost of not collecting.

Most businesses understand this arithmetic in the abstract. What they don't always calculate is the compound cost of delay. A debt that could have been recovered amicably at 8% commission in month two may require legal proceedings at month ten, adding €3,000–€8,000 in court costs and attorney fees. The total recovery percentage drops while the total cost rises. Speed and cost-effectiveness are directly linked.

What Professional Collection Actually Costs

Amicable collection: no-win, no-fee. Most reputable agencies — particularly those handling commercial debt recovery in Spain — operate on a contingency basis during the amicable phase. Commission rates typically range from 5% to 15% depending on the debt amount, age, and complexity. You pay nothing upfront and nothing if the debt isn't recovered. For debts under 90 days old, rates sit at the lower end. Older debts command higher commissions because they require more effort and involve lower recovery probability.

Pre-legal escalation: modest fixed costs. If amicable collection fails and the case requires a formal legal demand from a Spanish attorney, the cost is typically €300–€800. This isn't full litigation — it's an attorney-issued demand that signals legal proceedings are imminent. For many debtors, this is the tipping point. The marginal cost of this step versus the potential recovery makes it worthwhile for virtually any commercial debt above €10,000.

Legal proceedings: court costs plus attorney fees. The monitorio payment order — Spain's fast-track procedure for documented commercial debts — involves court filing costs proportional to the debt amount. For a €50,000 debt, expect total legal costs of €2,000–€5,000 including attorney fees. These costs are largely recoverable from the debtor if the case succeeds, though recovery of legal costs depends on the debtor's solvency and willingness to comply with the judgment.

The Cost of Doing Nothing

Every month of inaction has a measurable cost: declining recovery probability. Industry data shows that debts referred to professional collection within 60 days have recovery rates above 80%. At 90 days, rates drop to 60–70%. At 180 days, you're looking at 40–50%. Beyond a year, the probability continues to decline as debtors restructure, dispose of assets, or simply disappear from the commercial registry.

The no-win, no-fee model means early referral costs nothing if the debt is unrecoverable. Late referral costs you the difference between what could have been recovered and what actually is. The asymmetry is stark: early engagement has zero downside and significant upside.

How to Compare Agency Costs

Commission rate alone is a misleading comparison. A 5% commission from an agency with a 40% recovery rate costs you more than a 12% commission from an agency with an 80% recovery rate. The relevant metric is net recovery: the amount that actually reaches your bank account after all costs and commissions.

Ask agencies for their recovery rate on debts comparable to yours — similar amount, age, industry, and debtor country. Ask whether legal costs are included in the commission or charged separately. Ask what happens if the case reaches court and fails. The answers reveal more about cost-effectiveness than the headline commission percentage.

FAQ

Is it worth pursuing a €15,000 debt through professional collection?

At a 10% commission, you'd net €13,500 on full recovery. The write-off alternative generates a tax benefit of perhaps €3,000–€4,000. On no-win, no-fee terms, there's no financial risk in pursuing collection, only upside.

Do I pay the commission on the full debt or just what's recovered?

Commission is calculated on the amount actually recovered, not the full debt. If you're owed €100,000 and the agency recovers €75,000, you pay commission on €75,000. This alignment of incentives is one reason the no-win, no-fee model works: the agency only earns when you receive money.