Collection agency or Unpaid: What's the difference?

Do you think of a collection agency as your solution to resolving unpaid invoices? Sometimes a collection agency does, indeed, offer the answer to your problem. However, it is important to consider how you want to tackle the defaulter. Unpaid's IOS procedure could be a valuable alternative for you.

Collection agency or Unpaid


I have an unpaid invoice; what can I do?

An unpaid invoice is not necessarily a bad thing if your client pays the amount shortly after you send a reminder. As soon as the due date of an invoice has passed, politely remind your client to settle it. This can be done with a reminder letter, email, or simple phone call.
Does your customer pay quickly? Then the problem is solved. Unfortunately, sometimes customers do not respond to such reminders. This could be out of fear, because of liquidity problems, or even due to ill will.

Has your reminder procedure not worked? Send your customer a notice of default. This is their very last chance. If there is still no response, it is time for the next step in the collection process.

What should you do now? That depends on:

  1. The type of invoice. Is it a B2B (business-to-business) or B2C (business-to-consumer) invoice? Is your invoice addressed to a company, or is the debtor a private individual?
  2. Is the invoice disputed or uncontested?

In this article, we will discuss uncontested B2B invoices. If the customer has disputed your invoice, it is a matter for the courts. Neither Unpaid nor a collection agency can intervene in this case.

How does a debt collection agency work?

A debt-collection agency takes over part of the collection process from you. In consultation with such an agency, you decide where in the process you will call them in. This can be from the first reminder or perhaps after a notice of default.

A debt collection agency always starts with an amicable process. This means that what it asks of the defaulter is not legally enforceable. To start with, it will inform your debtor about the outstanding debt. Your client will receive a payment demand and is informed about the extra costs that will be incurred if they do not pay. If your debtor does not respond to the first reminder, a second letter will follow. Sometimes the debt collection agency also contacts the debtor by telephone.

Has the amicable procedure failed? Then the debt collection agency will evaluate, in collaboration with you, whether to close the file or proceed to legal collection. Again, here you have two options—the classic, slow procedure via a lawyer and the courts or the IOS procedure.

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The costs of debt collection

An agency must adhere to some rules regarding collection costs for B2B invoices.

Your defaulter will have to pay the following sums:

  • The invoice amount and, of course, the VAT thereon
  • Late payment interest

This is a percentage of the invoice amount that is often stated in your invoice conditions or general terms and conditions. If this is not the case, the agency will use a legally permitted percentage.

  • The flat-rate compensation clause
    These costs are calculated based on a maximum percentage of the invoice amount of all outstanding invoices (not including interest). A debt collection agency cannot charge more than is provided for in your general terms and conditions or contractually agreed upon with your customer.

How much do you pay a debt collection agency?

This varies greatly. Our analyses show that most debt-collection agencies display their rates on their websites with little transparency. A debt collection agency may charge an hourly fee, use a subscription formula, or apply the 'No Cure, No Pay' principle. This last one means that you only pay when the agency has actually collected your invoice. Unfortunately, this is not always a guarantee of good service, and it is vital to read the small print carefully.

Alternative: Unpaid & the IOS procedure

Do you dread a long and uncertain debt-collection process? It can be done fast. To recover an unpaid and undisputed B2B invoice, you can use the IOS procedure. This is the procedure Unpaid uses.

The IOS procedure is much faster, more efficient, and cheaper than the procedure used by a collection agency or law firm. With this Recovery of Undisputed Money Debts (IOS) procedure, you no longer have to go to court to collect an invoice. Moreover, Unpaid will not send your debtor any more reminders because you have already done that. Our bailiff takes immediate action.

What does the IOS procedure look like?

  1. You start your case via the Unpaid website. Everything happens online, so you do not have to travel anywhere.
  2. We check whether your invoice meets the IOS procedure prerequisites.
  3. You pay an advance. This legally stipulated advance payment depends on the scale of your invoice. We recover this from your debtor, so a successfully completed file costs you nothing.
  4. Your work is done. We appoint a bailiff who lives near your customer and with whom we have made clear agreements. They go to your customer within five working days to inform them that they have entered the IOS procedure and therefore have 38 days to pay or dispute your invoice(s).
  5. Has your customer still not paid after 30 days? If so, the bailiff will wait for another eight days (the legal waiting period). After that, the bailiff will automatically receive an enforceable title - a judgement - via the CROS database, a government computer system. The court does not have to intervene.
  6. With this judgement, the bailiff again applies a payment order giving your debtor a last chance. If they still do not pay within five days, the bailiff can proceed to seize goods and hold a public sale.

Fortunately, it rarely has to come to that. At Unpaid, we know that from experience.

 The differences between Unpaid and debt-collection at a glance:



Debt-collection agency

When can I use it?

For undisputed B2B invoices.

For undisputed B2B and B2C invoices.

How long will it take before I receive my money?

38 days is the latest day when the bailiff has a judgement to proceed with seizure. Usually, your client pays sooner.

Unclear. It takes at least two months before the bailiff has a ruling for seizure.

How much do I pay as a creditor?

In principle, nothing. You do pay a legally determined advance payment, which you get back after recovery of the invoice.



If your client still doesn't pay despite all your emails, reminders, and efforts, we will spring into action. Start your case in a few simple steps, and we will get to work:

Ready to start collecting?

Enter your VAT number and we will handle the rest.