Understanding Business Debt Collection

Business debt collection, also known as commercial debt collection, occurs when a company is owed money by another business and needs to recover it. This often involves unpaid invoices, service contracts, or lease agreements. Unlike consumer debt, business debt isn’t governed by the FDCPA and follows different legal and negotiation standards. This guide walks you through how the process works and what to expect.

$195,000
Average small business debt in the U.S.
Source: altLINE | Southern Bank
62%
Of small businesses report having overdue invoices
Source: QuickBooks/Intuit
15–30%
Typical success rate for commercial debt recovery without litigation
Source: Commercial Collection Agencies of America
What Counts as Business Debt?

Business debt refers to money owed by one business to another. Common examples include:

  • Past-due invoices for products or services
  • Unpaid commercial leases or rent
  • B2B loans or lines of credit
  • Wholesale or supplier debts
  • Software/service subscriptions or licensing fees

Commercial collections typically involve contracts or purchase orders as proof of debt.

How the Business Collection Process Works

Here’s what usually happens:

  1. The creditor sends reminders or a demand letter
  2. If unpaid, a commercial collection agency is engaged.
  3. The agency attempts collection through calls, emails, and notices.
  4. If necessary, they may escalate to litigation or arbitration

Business debt recovery tends to move faster, with less regulation than consumer debt.

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Focused young woman working on a laptop at her desk, managing finances.

What Legal Protections Do Businesses Have?

Business debts are not protected by the FDCPA
Contract law and state commercial codes apply…

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Overhead view of a hand using a calculator with US dollars and notes, representing finance and budgeting.

How Business Debt Affects Credit and Partnerships

Unpaid debts may:
Impact your company’s business credit score (e.g., Dun & Bradstreet)
Affect your ability to secure vendors, financing, or insurance…

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Payment, Settlement, or Legal Action?

Negotiate directly with the client if possible
Consider installment plans or early settlement discounts…

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Close-up of a letter announcing the arrival of a credit card amidst financial documents.

When Should You Hire a Commercial Collection Agency?

The debt is over 30–90 days past due
You’ve attempted multiple follow-ups with no results…

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Tools & Resources for Help

Commercial Collection Agencies of America (CCAA)
U.S. Small Business Administration (SBA) Debt Guidance
Uniform Commercial Code
Demand letter & collection call templates

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