Debt collection agencies in the UK tend to charge in one of three ways: commission, a fixed fee or a bespoke rate for a portfolio of debts. For a straightforward commercial debt, commission often falls between 5% and 15% of the amount recovered. The rate can be higher for old, disputed, low-value or overseas debts.
On a £10,000 invoice, commission of 5% to 15% would cost between £500 and £1,500, usually plus VAT. Legal action and enforcement may cost extra. The amount a business receives therefore depends on the full terms, not just the advertised rate.
Our debt collection agency works differently. It charges the creditor nothing for eligible commercial debt recovery. The creditor receives 100% of the invoice sum recovered.
How Are Debt Collection Agency Costs Calculated?
There is no standard rate across the industry. Quotes usually reflect the value and age of the debt, whether it is disputed, the debtor’s location, previous recovery attempts and the number of cases being referred.
Newer debts are often cheaper because the records are current and the debtor is more likely to engage. Rates may also fall for larger debts or regular instructions. Old or complex cases tend to cost more.
Typical Debt Collection Agency Fees
The table below shows the main pricing structures found in UK commercial debt recovery. The figures reflect public prices checked in October 2026. They are examples rather than quotes.
| Pricing structure | Typical charge | Example for a £10,000 debt | What to check |
| No collection, no fee commission | Often 5% to 15% of the amount recovered | £500 to £1,500, usually plus VAT | Whether commission applies to the invoice only or also to interest, compensation and costs. Some terms also charge commission if the debtor pays the creditor directly. |
| Commission plus an administration fee | An agreed percentage plus a fixed setup or case fee | A 10% rate plus a £100 fee would cost £1,100 before VAT | Whether the fixed charge is refundable if no money is recovered. |
| Fixed-fee letter | Some solicitor-led services advertise an initial demand from £25 plus VAT | From £25 plus VAT for the letter stage | A low fixed fee normally covers the letter only. Further recovery work, court action and enforcement cost more. |
| Monthly or portfolio pricing | A bespoke rate based on the number and value of accounts | Varies | Minimum terms, monthly charges and the amount of work included. |
| Advocate | No fee to the creditor for standard commercial debt recovery | £0. The creditor receives the £10,000 invoice sum recovered | The debt must meet Advocate’s eligibility criteria. Legal action is discussed and agreed separately. |
Many established agencies do not publish a full rate card. A business may therefore need a quote before it can compare the final cost.
What Does No Collection, No Fee Actually Mean?
No collection, no fee means no commission is due if the agency recovers nothing. A successful recovery still triggers the agreed charge. At 10%, recovering a £10,000 invoice would cost £1,000 plus any VAT due, leaving £9,000 before other charges.
The terms may also count a direct payment as a successful recovery, even when the debtor pays the creditor rather than the agency.
Why Do Most Agencies Charge the Creditor?
Most agencies use a creditor-funded model. Commission from successful cases pays for the agency’s staff, systems and work on debts that are not recovered. The rate normally rises when a case needs more work or carries more risk.
Fixed-fee providers charge for a specific action, such as a formal demand letter. The fee is due for completing that work, whether or not the debtor pays.
Advocate uses a debtor-funded model for qualifying business debts. It seeks reasonable recovery costs from the debtor under Late Payment Legislation rather than taking commission from the creditor’s invoice money.
Can Debt Collection Fees Be Added to the Debt?
Under Late Payment Legislation, a creditor can claim interest and fixed compensation on qualifying business-to-business invoices. The fixed amount is:
- £40 for a debt below £1,000
- £70 for a debt from £1,000 to £9,999.99
- £100 for a debt of £10,000 or more
If that fixed sum does not cover the expense, the creditor may also be able to claim reasonable recovery costs. Government guidance explains the rules.
Not every fee can be passed to the debtor. The type of debt, the contract and the costs incurred all matter.
What Should a Business Check Before Instructing an Agency?
The written quote or agreement should make clear:
- the commission rate and what it applies to
- whether VAT is included
- any minimum, setup or administration fees
- what happens if the debtor pays the creditor directly
- whether any fee is due if recovery fails
- what legal action and enforcement would cost
- who receives any interest and compensation recovered
The most useful comparison is the amount the business is likely to receive after all charges.
Is Advocate Really Free for Creditors?
Yes. Advocate does not charge the creditor for its standard commercial debt recovery work. Free to the creditor does not mean that there is no fee to be paid though. It means Advocate seeks its fee for the work carried out from the debtor under commercial Late Payment Legislation, instead of deducting it from the money recovered.
There are no instruction fees, subscriptions or commission deductions. If Advocate recovers an invoice, the creditor receives 100% of the invoice sum. If standard recovery does not secure payment, the creditor is not billed for the work carried out. This applies when the case is handled in line with Advocate’s terms.
This is different from a no win, no fee agreement. Under that model, the creditor pays an agreed percentage after a successful recovery.
Legal action is separate from the standard recovery service. It is not started automatically, and nothing proceeds without the creditor’s approval and prior agreement on costs.
Advocate accepts eligible unpaid commercial invoices worth at least £750 in total. Both businesses must be registered in the UK. You can submit your unpaid invoices online.