By OptioWPAdmin
April 30, 2019

How Much Does a Collection Agency Charge to Collect?

In lieu of hiring a collection agency, some companies believe they can successfully recover debt on their own. Launching an in-house collections department can be a costly matter and expend a great amount of resources. Businesses need to budget for the physical infrastructure of adding a collections department such as leasing a separate space, implementing phone systems, and installing lockers for personal items including cell phones. Furthermore, more employees need to be hired while costly collections software and advanced technologies are necessary in order for a collections department to operate.

All of this and more — such as compliance, certification and data security — is enough to drive many businesses to hiring a third-party collection agency to do the job.

With all this in mind, one of the first things they will want to know is “how much does it cost?”

What are the Average Costs of Hiring a Debt Collection Agency?

There are thousands of debt collection agencies within the U.S. alone, so prices vary per agency. The two most common payment structures, however, are flat fee and contingency-based models.

Flat Fee Collections

A flat fee payment model is a fixed rate that is charged per consumer account. This consistent fee is charged up front regardless of account size. The client receives 100 percent of the funds once collected. These fees usually range from around $15 – 25 per account. Prices tend to vary based on the volume of accounts the client transfers to the agency.

Contingency Based Collections

Hands cut money on plate cut of the money

This payment model is quite popular with many contemporary collection agencies. Contingency fee means that an agency only charges a fee once an account has been successfully collected. The average fees for this payment model range from 20 – 50 percent according to These fees are agreed upon through a contract between the client and the agency.

There are several factors that influence rates such as the average balance size of the accounts, the volume of accounts being transferred to an agency, the industry served, and most importantly, the age of the accounts.

Contingency fees are generally higher for older accounts because they are more difficult to collect.

The Value of Contingency Collections

Man in front of wall money bags question marksThe value offered by contingency collections is an important factor for companies to rally around while considering hiring a collection agency. Simply stated, nothing is owed if agencies fail to collect a debt. Furthermore, agency revenue is a function of the collected debt, so they can be trusted to make the maximum effort. As a result, this arrangement generally leads to a successful return on investment for business owners.

Benefits of Hiring an Agency

Hiring a debt collection agency permits business owners to focus on their company while the agency does the collecting. Furthermore, best-in-class agencies have compliance management systems, related certifications, and data security programs.

Agencies should conform with all federal and state laws by implementing compliance management systems (CMS). CMS should include internal management audits, compliance and training programs (and related tracking and documentation), vendor management policies, data security policies, payment processing procedures, complaint and dispute resolution policies, record retention guidelines and more.


Certification and data security are two additional components of top agencies. For example, payment card information (PCI DSS), controls affecting clients’ financial statements (SOC 1 Type II), and controls related to non-financial reporting (SOC 2 Type II) help protect clients and consumers. These certifications are driven by management policies, risk assessment, business continuity plans, vendor management policies and procedures, records management, and IT policies and procedures as well as review in areas such as application development, Abstract technology security on global network background,HR, data security and backup, vulnerability management and more.

Furthermore, agencies equipped with the latest technology and software can optimize the collections process for effective and compliant contact with consumers.

Entrusting the collections process to an agency with these factors helps ensure brand protection and customer retention while providing a favorable return on investment.

Why Work with Optio?

Choosing an agency with the right experience and industry resources is the best way to recover uncollected debt. Optio Solutions is a best-in class debt collection agency built upon a framework of industry experience, compliance, certification, data protection and collections technology. Our operations team provides excellent first- and third-party services in industries such as financial services, education, healthcare, retail, energy-utilities, telecommunications, and automotive. Additionally, the agency maintains PPMS certification (one of only 51 firms worldwide) from ACA international.

Organizations looking to bring on a debt collection agency or to replace a current agency should contact Optio to learn about our individualized programs.

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