What Hiring a Collection Agency Actually Costs You

The cut is the obvious part. The rest of the bill is harder to see until afterwards.

The contingency cut

Collection agencies are usually paid on contingency, commonly quoted in the 25% to 50% range of whatever they actually recover. That percentage comes off money you already earned and already did the work for.

On a $4,500 invoice, that is arithmetic, not a forecast:

At 25% contingency the agency takes $1,125 and you keep $3,375.
At 40% the agency takes $1,800 and you keep $2,700.
At 50% the agency takes $2,250 and you keep $2,250.

And that is the good outcome. Contingency means they are paid on what they collect, so if they collect nothing you are back where you started, several months later.

What else you hand over

Control of the tone

Once the file is placed, someone else decides what your customer hears and how often. Licensed collection agencies in Canada operate under provincial consumer protection rules that limit contact hours, contact frequency, and who else may be contacted, but within those limits the approach is theirs, not yours. Your business name is attached to it either way.

The relationship

A customer who goes quiet is often not refusing to pay. They may be embarrassed, or genuinely short this month, and a demand letter gives them nothing to say yes to. Once an agency has been involved, that customer generally does not come back.

The timeline

Placement is not a fast lane. The file moves at the agency's pace, and you have very little visibility into it while you wait.

Worth trying before you place the file

RemitRight has no subscription or collection commission, so it can be worth trying first. An agency is still available afterwards. Here is what RemitRight actually does:

✓A text, not a letter: the AI contacts your customer about the overdue balance and includes a secure Stripe link, with a one-word opt-out on every message, as CASL requires.

✓It answers back: what the charge was for, when it is due, whether the date can move. Questions get answered instead of ignored.

✓A way to say yes: pay in full, or split the balance into 3 or 5 automatic monthly payments taken by Stripe.

✓You keep the receivable: successful payments go to your connected Stripe account. RemitRight charges no subscription, setup fee, or collection commission.

✓The plan fee is optional: a customer choosing 3 monthly payments pays 3% total; 5 monthly payments carry 5% total. Paying in full has no RemitRight plan fee.

The short version

An agency is paid a share of your invoice to speak to your customer on your behalf. That is a reasonable trade for a file you have genuinely given up on. It is an expensive trade for one that simply never got followed up on properly.

Try the free option first. The agency will still be there.

Start with the free option

Add one overdue invoice and review the follow-up. No RemitRight subscription or collection commission.