When to send an overdue invoice to a collection agency

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Send an overdue invoice to a collection agency at 90 days past due, or at 60 days if the customer has stopped responding, and only after a statement, a final notice and a formal demand have been ignored. Later, the debt loses value. Earlier, you pay 15% to 45% for a debt you could still collect.

The 60 to 90 day figure appears in every ranking guide, usually without the dates behind it. This page maps the number to a dated ladder for four markets, sets the agency fee against the cost of waiting, and lists the four things that must be on file before day 60.

How long to wait before sending invoice to debt collector

Wait until the invoice is 90 days past its due date, or 60 days if the customer has gone silent. Count from the due date; the invoice date does not start the clock. Every rung below the agency has to be dated and ignored before you hand the account over.

90 days is the figure most collection agencies and business publishers give (Summit). The reason is arithmetic: a debt is easiest to collect when it is fresh, and each month of silence lowers the recovery rate while the agency's percentage stays the same.

Inside those 60 to 90 days, a common reminder cadence is four to six touches: pre-due, due date, then around 3, 7, 14 and 30 days overdue (source: bill.com payment reminder guide). A final notice follows the last reminder, then the formal demand, then the agency. Three situations move the day count.

• Go earlier when the customer has stopped answering entirely, disputes nothing and has asked for no plan. Silence at day 45 rarely turns into payment at day 90.
• Go later when the customer is talking, has acknowledged the debt in writing and is paying something. A part-payment also restarts the limitation clock in NZ and in most Australian states.
• Never hand over an invoice the customer has formally disputed until the dispute is answered. An agency chasing a disputed invoice loses the customer and usually the money.

When to send overdue invoice to collections agency

Send it when four things are already on file: a statement showing the full balance, interest or a late fee posted to the account, a final notice with a deadline that has passed, and a formal demand letter that went unanswered.

An agency's first act is to write to the customer with the debt, the interest and a deadline. If your own file already contains all of that, the agency starts from strength and the customer has no procedural gap to hide in. If it does not, you are paying an agency to do your day-30 work.

Templates for the demand rung are already on this site: the letter before action template for the UK, the letter of demand template for Australia and New Zealand, and the wider collection letter templates set for the earlier rungs.

The day-count rule by market

The 60 to 90 day trigger holds in every market. What changes is the legal step beside the agency, the interest you can add, and the limitation period that ends the whole exercise.

Two UK notes. The Small Business Commissioner runs a free complaints service for small suppliers unpaid by larger customers, and its help stops once legal action starts, so use it before day 60. The Commissioner also recommends choosing an agency that is a Credit Services Association member.

Two Australian notes. The joint ACCC/ASIC Debt Collection Guideline (ASIC RG 96) governs contact hours, methods and frequency for any agency you engage, and bans harassment and misleading conduct. Interest is contractual, so if your terms are silent there is nothing to add: see late fees in Australia and late fees in New Zealand for the terms wording.

What waiting costs against what the agency costs

A commercial agency commonly charges 15% to 45% of what it recovers (industry guide). The fee is a fixed percentage; the amount it applies to shrinks every month you wait.

Published recovery rates by debt age come from vendor blogs with no primary study behind them, so this page does not quote them. A debt at day 90 is easier to collect than the same debt at day 180.

Here is the arithmetic on a £5,000 UK B2B invoice handed over at day 90, against the same invoice collected by your own ladder at day 45.

Change the figures for your own invoice. The calculator loads with the same numbers as the table.

The gap is £1,231 on one invoice, and the agency column assumes the debt is still collectable at 90 days. The interest and the fixed sum are yours under the 1998 Act whether or not an agency is involved; the worked figures and band thresholds are in late payment fees in the UK.

The scale of the problem is why the day count matters. Intuit's 2026 US report found 59% of small businesses have invoices 30 or more days overdue, and the average business is owed $17,700 (Intuit QuickBooks, July 2026).

Xero's Small Business Insights for the June 2026 quarter put average days late at 8.3 in the UK, 6.0 in Australia and 4.7 in New Zealand. Most invoices never reach day 60. The ones that do are the ones this ladder is for.

What happens when an invoice goes to collections

The agency writes to and calls the customer in your name or its own, takes its fee from what it recovers or bills you separately, and reports back. The decision about what the customer is afterwards stays with you.

What is the 7-in-7 rule? It is a US Regulation F limit: a collector of consumer debt is presumed to break the rules if it calls about a consumer debt more than seven times in seven days. It covers consumer debt only, not business invoices (CFPB, 12 CFR 1006.14).

1. You hand over the file. Invoice, statement, reminder history, final notice, demand letter, any signed terms. A complete file is the difference between a two-week recovery and a six-month one.
2. The agency sends its own demand. Usually with a short deadline and a note that the debt has been placed for collection.
3. Calls and negotiation follow. In Australia, within the contact rules of RG 96; in New Zealand, within the Fair Trading Act's ban on misleading representations; in the US, the FDCPA does not cover business debt, so your contract and state law govern.
4. Recovery, plan or recommendation to sue. The agency either collects, agrees instalments, or tells you the debt needs court. Its fee applies to what it recovers.
5. You decide what the customer is afterwards. Stop credit, cash-on-delivery terms, or a clean slate. The agency has no say in that.

Two things to ask before you sign with an agency: whether the fee applies to payments the customer makes directly to you after placement, and whether the agency can settle for less than the full amount without your approval. Get both answers in the agreement.

Automate the rungs below the agency with Paidnice

The agency decision is easy when every earlier rung has fired on its own, on the day it was meant to, with the evidence on the ledger. That is the part software does; the hand-over itself stays a human decision.

Paidnice runs the rungs below the agency from the ledger in Xero or QuickBooks Online.

• Reminders go by email and SMS on a schedule set per customer group.
• Statements send automatically with the overdue balance.
• Late fees and statement interest post to the ledger as invoices, with a Bank of England base rate toggle so UK statutory interest stays compliant as the base rate moves.
• Escalations trigger at a chosen number of days overdue, with types of Phone Call, Stop Credit and Template Legal Letter, and the instructions go to a designated email address.

Customers running the ladder this way cut their average wait for payment in half, within 30 days. Plans start at £49 a month (Essentials, GBP).

Where the agency fits: set the escalation at day 60, type Template Legal Letter, and the demand goes out with the whole file behind it. Day 90 is then a decision with evidence. For the wider ladder design, read the invoice escalation ladder and automatic invoice escalation for Xero and QuickBooks.