B2B debt collection: what it is and how it works

What B2B debt collection is

B2B debt collection is getting an unpaid invoice paid when the customer that owes it is another business. It starts with your own reminders, moves to a collection agency or law firm that contacts the debtor company and negotiates payment, and ends in court only if the debtor still refuses. It is also called commercial debt collection.

In the UK the same work is usually called commercial debt recovery or business debt recovery. Whatever the name, three things set it apart from collecting from consumers: the debtor is a company with a finance team, the amounts are usually larger, and the customer relationship often matters after the invoice is paid.

Most cases are settled before court, in the amicable phase. That is where a good collector earns its fee: by reaching the person who can approve the payment and agreeing a date or a plan.

B2B vs consumer debt collection

The biggest difference is the law. In the US, the federal Fair Debt Collection Practices Act (FDCPA) protects consumers only: it defines a debt as an obligation “of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes” (15 U.S.C. §1692a(5)). A business invoice falls outside it.

Limitation periods differ by country and by state, so check the one that governs your contract. Our table of limitation periods for commercial debt covers the main countries.

The four steps of B2B debt collection

1. Reminders and a final demand. Your own reminders, a call to accounts payable and, when they go unanswered, a formal final demand with a deadline. Our demand letter templates cover this step, and our guide to unpaid invoices sets out the timing.
2. Pre-legal collection. A collection agency or law firm takes over: it verifies the debtor, sends a formal demand on its own letterhead and follows up by letter, email and phone. It negotiates a payment date, a payment plan or a settlement. Most agencies work this phase on a no win, no fee basis, which Europe calls No Cure, No Pay.
3. Legal action, if you choose it. If the debtor refuses or does not respond, the collector can recommend a court claim. In the EU, an uncontested cross-border claim can go through the European Payment Order. Legal action costs money and is a decision for you, never automatic.
4. Enforcement. A judgment is not yet money. Enforcement uses the local court system to seize assets or bank balances, and a judgment from your own country may first need to be recognized where the debtor is: see how to enforce a judgment abroad.

When to hand an invoice over to collection

Reminders do most of the work on most invoices. Collection is the next step for the ones that are left. Hand over when one of these is true:

• The customer has stopped replying, or has missed two dates they promised.
• The invoice is 45 to 90 days past due and there is no agreed plan.
• The customer is in another country, where your reminders carry little weight and you cannot sue easily.
• The limitation period for the claim is getting close.

Two situations need something else first. If the customer disputes the goods or the work, sort out the dispute or ask for a quote: disputed claims are not standard collection. If the customer is in formal insolvency proceedings, a collector usually cannot help, and a local lawyer can tell you how to file your claim.

What B2B debt collection costs

Collection agencies usually charge a contingency fee, a percentage of what they recover, so you pay nothing if nothing is collected. Law firms more often charge fixed fees or hourly rates. The rate depends on the size and age of the claim, the country and whether it is disputed. Before you compare quotes, check what costs extra and who keeps the interest and fees the debtor pays.

On Debitura, there is no upfront cost. You pay a success fee only when money is recovered: from 6% in Europe and 7.5% elsewhere, depending on claim size and the debtor's country. Claims over 12 months cost more, and legal action is quoted separately and starts only if you accept. See your exact fee on the pricing page or read our guide to debt collection cost.

B2B debt collection across borders

When your business customer is in another country, three things change. The claim runs under that country's law and limitation period. The demand that works is in the local language, from someone the debtor knows can take them to a local court. And any judgment has to be enforced where the debtor's assets are.

A business with a customer abroad has five realistic options:

• Find a local agency in each country, and negotiate a contract in a foreign language every time.
• Use an international agency or network, which often passes the case to a local subcontractor with little visibility for you.
• Sue at home, then enforce the judgment abroad, which is slow and not always possible.
• Use an EU procedure such as the European Payment Order, if the claim is uncontested and the case is cross-border within the EU.
• Write the debt off.

With Debitura, one agreement covers pre-legal collection in every country we serve, in 180 countries. We match your case to a vetted local partner in the debtor's country, you see the partner before anything starts, and you follow every case on one platform. On European cases, the median time to first payment is 33 days and the median time to close is 44 days. Our guide on how to collect a debt from a business customer abroad goes through it country by country, for example in Germany, France or the UK.

Two clauses make collection abroad easier later: a retention of title clause and a clear right to late payment interest.

How Debitura fits

Debitura is not a collection agency itself. We match each claim to a licensed collection agency or law firm in the debtor's country and provide the software, one standard contract and the quality controls around the work. Before a partner joins, we check their license and registration and verify who they are. A message in the case chat creates a formal response task, and partners must resolve open tasks within 48 business hours.

You submit claims by hand, by CSV, from QuickBooks Online, Stripe, Zoho Books or KashFlow, through Zapier or our REST API. More than 5,000 businesses have registered, from small businesses with one overdue invoice to SaaS companies and manufacturers with customers in many countries.

Ready to hand over a claim? See how our commercial collection agency service works, step by step in how it works, and the terms in the Standard Debt Collection Agreement.