Late payments are a growing challenge for businesses, with increasing economic uncertainty amplifying the risks associated with cash flow disruptions.
In an exclusive new survey, The Kaplan Group reveals a striking trend: companies that outsource more overdue invoices to collection agencies experience substantially higher recovery success.
The survey was conducted among 100 financial decision makers, including CFOs, VPs of finance, controllers, and directors of finance, representing businesses with under $10 million to over a billion in revenue.
Despite widespread awareness of collection agencies—94% of companies use them to some degree—most still underutilize this resource.
- The majority of respondents outsource less than 25% of severely overdue invoices.
- Those who outsource over 50% of their 90+ day invoices are nearly four times more likely to recover more than 60% of them.
Companies that lean into agency support see real results. The hesitation around outsourcing is no longer supported by the data. Higher usage equals higher performance—and not by a small margin.
Key Findings From the Study
- 28.36% of invoices aged 90–180 days are written off.
- Companies that outsource over 50% of 90+ day invoices are 3.8x more likely to achieve a 60%+ recovery rate.
- 94% of businesses use collection agencies—but only 13% outsource more than 50% of their severely overdue invoices.
- Companies with low agency usage (<25% of invoices) see 79.3% fall below 60% success rates.
- Among companies with high agency usage, 76.9% exceed a 60% recovery rate.
Room for Improvement: Only 28% of companies achieve a high success rate of over 60%, suggesting that most businesses have room to improve their late-stage collection strategies.
High Usage = High Success
Outsourcing more than half of overdue invoices results in significantly better collection outcomes. These companies nearly quadruple their chances of reaching the top success tier (60%+ recovery rate).
- Outsourcing isn’t just a last resort. For the most successful companies, it’s a proactive part of the collections process.
Underutilization Is the Norm
While most companies rely on collection agencies in some capacity:
- 16% outsource fewer than 10% of overdue invoices.
- 34% outsource between 11–25%.
- Only a minority (13%) outsource over half.
Comparative Effectiveness of Different Methods
| Method | Overall Effectiveness | Top Performing Segment |
| Payment Plans | 51% | <$10M (65%) |
| Collection Agencies | 50% | $251M–$1B (77.8%) |
| Legal Action | 50% | >$1B (80%) |
Collection agencies are on par with other late-stage recovery tools, but deliver superior results when used extensively and strategically.
Hesitancy Around Collection Agencies Is No Longer Justified
This study underscores that hesitancy to outsource overdue accounts may stem from outdated assumptions—such as fear of damaging client relationships or concerns over cost—that are no longer justified by modern agency performance.
Many companies wait too long or only outsource the most hopeless cases.
- In reality, timely outsourcing improves recovery rates and preserves relationships by removing friction from internal teams.
Some companies—especially those over $1 billion— do see greater success with legal action, perhaps reflecting stronger in-house legal departments or greater resources to pursue court action. Agencies often offer legal action on a contingency basis, leading to lower upfront costs. This resource is underutilized, and more companies should consider taking advantage of it.
What’s Next
To reduce write-offs and improve cash flow, companies should:
- Audit current accounts receivable practices and late-stage recovery methods.
- Increase the volume of significantly overdue invoices sent to collection agencies—ideally above the 50% threshold.
- Benchmark internal recovery rates against industry peers using this study’s success tiers.
If you’re not outsourcing at scale, you’re not maximizing your recoveries. It’s time to treat collections as a strategic function—not a reactive one.
Methodology
- This new survey was conducted in February 2025.
- An exclusive cohort of 100 key financial decision-makers (CFOs, VPs of finance, controllers, and finance directors) participated, representing small businesses to large enterprises ($10M to $1B+ revenue).
- The survey analyzed preventive payment measures, their adoption rates, and their impact on reducing late payments.
- Data was segmented by DSO performance to identify which strategies lead to better collection outcomes.
