Commercial collection agencies work in a variety of ways, based on the agency. Some agencies may have various options. Here are the three main ways that commercial collection agencies work.
1. The commercial collection agency may purchase the debt from your company at a rate lower than the amount of the actual debt. In this way you obtain most of the funds you were missing, and the agency receives a fee for their services. This will only be done, however, if the agency is fairly certain that the debt will be repaid eventually.
2. The commercial collection agency may require a percentage of the debt amount, typically twenty percent. This covers the fees for their service. The agency may collect the fee in advance, or they may collect the fee upon receipt of the debt.
3. Some commercial collection agencies opt to provide services at a flat rate. The agencies that operate in this manner typically quote each client individually, based on the amount of the collections, the number of collection accounts, and the amount of time they anticipate spending on collection activities.