Recovering Your Unpaid Debts – Debt Collection Agencies vs Lawyers

Debts are an unfortunate and sometimes ugly reality of running a business.  As a business owner, you may find yourself in the position where you are not receiving payments for goods or services, and this may be due to your debtor being unable to afford to make their payment, or quite possibly be a professional debtor.  Chasing a debtor to recover your hard earned money is a time consuming, and largely, unpleasant experience. The worst part is that you may not even receive the payment after all your efforts. 

Before you get the professionals in

If you have had a client not pay for your goods or services, make sure you have followed the below steps before engaging in their services.

  • Send a reminder invoice with a clear due date for the payment
  •  If the due date for the payment passes, follow the invoice with an overdue email – aim to send this 2 days after the due date as this allows time for any money they may have paid on the date to reach your account. The tone of your email should be upbeat and outline the new due date, which should be no more than 3 days from the email.
  • If the new due date passes, attempt to contact the debtor through a phone call or in person meeting. Talking directly with a person can have a great impact and maintaining positivity is key.

Find more information on how to ask for payment here.

If you’ve followed the above steps and have not received payment from your debtor there are services available to you that can help you recover these funds.

What are my options to recover my debt?

If you have already tried to recover your debts to no avail, there are three other possibilities

  1.       Waive the debt – If you choose to waive the debt, it just means that you will not receive any form of payment from the debtor. This is usually not a favourable option, unless the debt is ridiculously small, and might be less in value than the cost of engaging some professional help to recover the debt.
  2.       Hire a Lawyer – There are lawyers who specialise in the practice of recovering unpaid debts. They can also offer advice as to whether to pursue the debt through legal actions or through a debt collection agency
  3.       Utilise the services of a debt collection agency – debt collection agencies specialise in the recovery of unpaid debts for their clients and do so through many different actions based on years of experience.

What will a Lawyer do to recover my debt?

A lawyer can act on behalf of you and your business to send letters of demand to your debtor as well as provide possible repayment options.  As professional negotiators and dispute resolution experts, a lawyer is well-equipped to handle debt recovery.

A professional lawyer can also provide advice as to whether engaging in their services is appropriate for your individual situation, as legal proceedings can often be a time consuming and costly affair.

What will a Debt Collection agency do to recover my debts?

A debt collection agency specialises in the recovery of bad debts.  Because it is their primary business focus, there is usually a strong history of successful debt recovery in many different industries.  This focus on debt recovery also allows them to tailor a that is based on their experience and suitable for your business needs. In addition to this, a debt collection agency will usually have a large pool of professionals in the business to work with.

Debt collection agencies work to communicate regularly with your debtor, removing this burden from the shoulders of your business.  Despite stereotypes you may have seen, a debt collection agency will engage with your debtor in a professional and respectful manner to resolve your debt.  

Which is better to recover your unpaid debts?

Naturally, there are advantages and disadvantages to working with either a lawyer or debt collection agency, here are some things to consider.

Working with a Lawyer:


  • Involving a lawyer can prompt the debtor in payment quite quickly as the fear of legal action against them and lengthy court proceedings will want to be avoided at all costs.
  • As many debt recovery agencies work on a commission basis, depending on the size of your debt, it may be worth engaging in legal help.  For particularly large debts it could work out to be more cost effective to work with a lawyer.
  • Lawyers are professionals in dispute resolution and negotiation.  It is their job to gather the facts and resolve issues.  If you are willing to renegotiate the debt, a lawyer can help you do this.


  • Lawyers can be expensive.  They may work on an hourly basis, or a set amount regardless of the size of the debt. Or in some instances they may not work with you if the debt is small. 
  • The threat, or perceived threat of legal action may be an aggressive action depending on who your debtor is.  And while in many instances a lawyer will be successful in recovering the debt, it could also have an adverse effect and incite agitation in the debtor.

Working with a Debt Collection Agency:


  • Focus and Experience – As a debt collection agency’s business is to recover debts there is usually a wealth of experience that is often unbeatable. They can draw on this experience to build a strategy that will support the recovery of your debt. In addition to this experience, as debt collection is the game, the focus is on you and your debt recovery.
  • Speed of recovery – many debt collection agencies will work with great speed to recover your debt as they often work on a commission basis, where if they don’t recover the debt, they will not be paid. So, it is in their best interest to move fast to recover your debt so they can get paid for their services.
  • Cost Effective – As we mentioned above, many debt collection agencies work on a commission, no win, no fee basis these days, meaning if they are not successful, then you won’t be obligated to pay them.  In addition to this, many offer different commission payment structures, where it may be a percentage of the payment, or if you subscribe to their services, you may pay a fee that will reduce the overall commission percentage.  Which can make it an affordable option.  



  • Costs can vary – As outlined above, debt collection agencies often work on a commission basis, where if the debt they are recovering is quite large, this fee could be substantial.
  • May need to engage in legal services – if  an agency is not successful in recovering a debt, you may be required to engage in legal proceedings, which can make the process take longer and be more costly. However, many debt collection agencies now have inhouse legal experts who will be able to advise early on if this is the case.


Who do you Choose?

As you can see, each debt recovery professional has their advantages and disadvantages. Ultimately the choice is up to you and what is best for your business. However, before you engage in either a lawyer or debt collection agency’s services, there are some key things to consider:

  1.       What is their experience? You want to work with someone who has had experience in recovering debts in your relevant industry.  Their experience will provide them with a bevvy of strategies that they can utilise and apply to your circumstances.
  2.       How big is the debt? The cost of the service and the size of your debt could help make the decision of which service you use easier for you.  If your debt is only small, a lawyer’s fees may be too costly, or if it is a large debt, depending on the agency’s commission structure, your costs might be quite high.
  3.       The urgency of the recovery – while recovery of all debts is arguably urgent, it is wise to remember that legal proceedings can take time. A debt collection agency’s commission structure usually relies on them recovering the debt, meaning without this recovery you will not pay for their services, and this added incentive can help speed up the process.  

Often you can speak to both debt collection agencies and lawyers to seek advice before actively utilising their services, which we strongly recommend you do.  In most instances they will be able to advise a recommended course of action for you to take.

Why you should work with JMA

At JMA Credit Control we have been helping companies of various sizes to recover their debts for over 50 years. Our low risk strategy has been built upon our knowledge and practical experience.  Our aim is to recover your money with the least possible hassle and cost to you. Maintaining professionalism, we follow best practice standards, and we uphold legality throughout the entire process, treating everyone involved with respect and understanding.

We aim to use legal proceedings as a last resort – if we have exhausted all other avenues, we are a quick legal procedure in place with our in-house solicitors, allowing us to issue legal action within 48 hours. And if we believe there is little to no chance of recovering your debt, we will advise you as we are committed to not wasting your money. We also aim to maintain transparency throughout the debt collection process by gaining you access to our live client portal where you can track the progress of your case.

Talk to the team today by contacting us on 1300 588 728 or filling in your contact details here.

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