How to choose between in-house collection and a debt collection agency
What you may do yourselves, what you may not — and when doing it in-house stops paying off.
You know where the line runs between doing it yourselves and passing the case on — and what the two options actually cost you.
Step by step
- 01
Understand what you are allowed to do yourselves
You may always collect your own claims — send reminders and a collection notice, and enter into agreements. That is in-house collection, and it requires no authorisation. What does require a licence is collecting SOMEONE ELSE'S claims.
- 02
Work out what it costs you to do it yourselves
Not just the postage. The hours in the finance function, the calls nobody wants to make, the deadlines that slip, and the cases that never get past the third reminder. That is what in-house collection actually costs.
This is where it goes wrongThe most expensive item is the cases that simply sit there. A claim nobody follows up on is not free — it is written off.
- 03
Look at where your cases die today
Most organisations have no trouble sending the three reminders. What does not happen is the collection notice, the call, the negotiation and the bailiff's court. If that is where your cases stop, that is where you need help.
- 04
Look at the pricing model, not the individual price line
No cure no pay sounds free, but it costs you a share of your own money every time it works. A fixed subscription costs the same every month — and lets you keep the principal. Do the maths on your own case volume.
- 05
Decide what should remain yours
The relationship with the customer, the tone of the letters and the decision on when to escalate. You can comfortably keep all of that, even when the collection work itself sits somewhere else.
This is where it most often goes wrong
Not because anyone is careless, but because the mistakes are easy to make and only surface once it is too late.
You wait until the cases are old
Six months of in-house collection followed by a handover is the most expensive sequence there is. The older the claim, the lower the recovery rate.
You choose on price per case instead of on outcome
The cheapest supplier is not the one that charges least per letter. It is the one that brings the most money home — and does not stop when the claim becomes large or awkward.
You believe debt collection is a threat aimed at the customer
Over 80 % of cases end in full or partial payment, and most never see a courtroom. What ruins the relationship is six months of silence — not a professional letter.