Comparison
Collection agency vs. selling the debt to a debt buyer
Updated 2026-10-24
Selling a business debt gets you a fixed, immediate payment, but buyers typically pay a small fraction of face value and less as accounts age. Placing it with a collection agency keeps ownership with you, so you receive the full recovery minus a contingency fee, but you wait and there is no guarantee. Sell when you want certainty and a clean break on old or low-value accounts. Use an agency when recovery prospects are reasonable and you want the upside.
| Collection agency | Selling to a debt buyer | |
|---|---|---|
| Who owns the debt | You do | The buyer does after the sale |
| What you receive | Amount recovered minus a contingency fee, commonly 15–50% | A one-time price, usually a fraction of face value |
| Timing | As the debtor pays | At closing |
| Certainty | Uncertain; depends on recovery | Fixed once the sale closes |
| Control over tactics | You approve settlements and legal action | None after the sale |
| Best fit | Collectible accounts, recent to moderately aged | Very old, small, or written-off accounts in volume |
| Market availability | Widely available for commercial debt | More limited for B2B than for consumer debt |
| Accounting | Debt stays on your books until resolved | Debt leaves your books at sale |
How each option works
When you place a debt with a collection agency, you remain the creditor. We work the account and send you what we recover, minus our fee. You decide whether to accept a settlement offer and whether to approve legal action.
When you sell a debt, you assign your rights to a buyer for a price agreed upfront. The buyer then collects for its own account and keeps everything it recovers. Your involvement ends after the sale, aside from providing documents.
The difference matters most on accounts that could still be collected. With an agency, a good outcome on one account goes mostly to you. With a sale, any recovery above the purchase price belongs to the buyer, which is how the buyer earns its return.
Selling also changes who your customer hears from. After a sale, the buyer decides how hard to push, which settlement to accept, and whether to sue. If the debtor is a business you may want to work with again, that loss of control is worth weighing.
What debt buyers usually pay
There is no standard price. Buyers look at the age of the debt, the documentation, whether the debtor is still in business, the balance size, and how many accounts are in the portfolio. Older debt and debt owed by closed businesses sell for less. Prices are commonly a small share of face value, and a single commercial account may not attract a buyer at all.
The commercial debt sale market is thinner than the consumer one. Larger portfolios with consistent documentation are easier to sell than one-off accounts.
If you do approach buyers, ask how they will collect, whether they use attorneys, and what representations they want you to make about the debts. A purchase agreement may require you to warrant that balances are accurate and undisputed, and to buy back accounts that turn out not to be.
When selling is the better choice
If those fit, selling is a reasonable decision and often a cleaner one than letting stale accounts sit in placement.
- The accounts are several years old and have already been worked by an agency
- You have a large volume of small balances that are not worth individual attention
- You are closing or selling your business and need to clear the books
- You want a known amount now and are willing to give up any upside
When a collection agency is the better choice
On a collectible account, the net amount you receive from a successful recovery is usually far higher than a sale price, because the contingency fee is charged only on real money collected.
- The debt is recent enough that the debtor can still be reached
- The debtor is still operating and has the means to pay
- The balance is large enough that the gap between sale price and net recovery matters
- You want a say in how the customer is treated and what settlement is accepted
Doing both in sequence
Many creditors use an agency first and sell what is left. Accounts that do not resolve after a full collection effort, and that are not worth suing, can then be offered to a buyer. Before you sell, check your contracts for assignment restrictions and talk with your accountant about how the sale and any bad debt write-off should be recorded.
Whichever route you take, keep the paper trail intact: contracts, invoices, delivery records, and correspondence. Both agencies and buyers value accounts with complete documentation.
Frequently asked questions
Can I sell a debt that is already placed with a collection agency?
Usually yes, once you close the placement under the terms of your agreement. Recall the account in writing so the agency stops work before the sale.
Do I need the debtor's permission to sell the debt?
Generally no, but your contract with the customer may restrict assignment. Read it, or ask your attorney, before you sell.
How do I decide between selling and placing an account?
Estimate what a full collection effort might realistically net after fees, then compare it to a firm offer from a buyer. If the account is fresh and the debtor is operating, placement usually comes out ahead. If it is old and already worked, a sale may.
Is selling better for my taxes?
It depends on your accounting method and situation. A sale and a bad debt write-off are treated differently, so ask your CPA before deciding.