No win no fee is the standard commercial arrangement for international debt recovery, and for good reason: it eliminates the financial barrier that prevents most overseas creditors from pursuing legitimate debts. You risk nothing upfront. The agency invests its own resources. If they recover money, they take a percentage. If they don't, you owe them nothing.
This guide covers how the model works in practice, where the fine print matters, and how to ensure you're getting a genuine no-win, no-fee arrangement rather than one with hidden costs.
How No Win No Fee Works for International Debts
The model has two distinct phases, and the fee structure differs for each:
Amicable phase: pure contingency. The agency contacts the debtor, issues demands, conducts field visits, and negotiates payment — all at their own cost. If they recover money, they charge a commission (typically 5–15% for commercial debts). If they don't recover anything, you pay nothing. This phase resolves the majority of commercially viable debts and is the foundation of the no-win, no-fee model.
Legal phase: typically not contingency. This is where most creditors encounter the fine print. If amicable collection fails and the case requires legal proceedings — monitorio filing, attorney representation, court costs — these expenses are usually charged separately. Some agencies advance legal costs and recover them from the commission if successful. Others require you to fund legal costs directly. A few offer fully contingent models that cover legal costs, but at higher commission rates (20–30%). The arrangement should be clearly defined before you sign.
Commission Rate Structures
Rates vary by debt characteristics:
Debt amount. Larger debts attract lower percentages. A €500,000 debt at 5–7% generates more agency revenue than a €20,000 debt at 12–15%. Most agencies use sliding scales that reflect this economy.
Debt age. Older debts are harder to collect, which means more agency effort per recovery. Debts under 90 days: 5–10%. Debts 90–180 days: 8–12%. Debts beyond 6 months: 10–15%. These ranges are indicative — specific rates depend on the agency, jurisdiction, and case complexity.
Jurisdiction. Some countries are harder to collect in than others. Spain falls in the moderate range — the legal tools are effective, but payment culture creates challenges. Rates for Spanish commercial debts are comparable to other major European markets.
What "No Win" Actually Means
The definition of "win" matters. In a genuine no-win, no-fee arrangement:
"Win" = money received by you. Not money promised by the debtor. Not a payment plan that hasn't been honoured. Not a court judgment that hasn't been enforced. You should pay commission on funds that have actually been transferred to your account.
"No fee" = no commission and no hidden charges. No administration fees. No case-opening fees. No "processing" charges. If the agency charges anything before they've recovered money, it's not a true no-win, no-fee model.
Be specific when reviewing the engagement letter. The language should clearly state that commission is payable only on funds actually received by you.
Red Flags
Upfront fees of any kind for the amicable phase. Vague definitions of what constitutes "recovery." Commission charged on promises rather than payments. Exclusivity periods longer than 6 months without performance benchmarks. No clarity on who pays legal costs if the case goes to court. Guarantees of specific recovery amounts (nobody can guarantee outcomes).
The Economics: When No Win No Fee Makes Sense
For virtually any commercial debt above €10,000 owed by a Spanish company, no-win, no-fee collection makes economic sense. The calculation is simple: the cost of collection is a percentage of what you recover (which is money you wouldn't have received otherwise). The alternative — writing off the debt — produces zero recovery at zero cost but leaves you €10,000+ poorer.
Even at 15% commission on a €50,000 recovery, you're receiving €42,500 that you wouldn't have received without professional collection. That's not a cost — it's a return on delegated effort.
FAQ
If I switch agencies, does the new agency also work on no-win, no-fee?
Yes. Genuine no-win, no-fee agencies evaluate each case on its merits, regardless of whether a previous agency attempted collection. However, the new agency may assess the case differently based on what's happened (or hasn't happened) during the previous collection attempt. A debt that's been mishandled may still be recoverable, but the approach and timeline may differ.
Are there debts that agencies won't accept on no-win, no-fee terms?
Yes. Debts below the agency's minimum threshold (typically €10,000–€15,000 for commercial debts), debts against insolvent debtors, debts with no documentation, and debts past the statute of limitations (5 years in Spain for commercial claims) are commonly declined. A good agency explains why and may suggest alternative approaches for borderline cases.
Alan Perez
💥 World citizen / 🛵 Tourist, Senior Debt Collection Manager, Business Debt Claims Expert
