Amicable debt collection in business: a pragmatic approach
Amicable debt collection refers to all the steps taken to obtain payment of a debt without initiating legal proceedings.
This type of debt collection is actually a proactive conversation between the company and the debtor, generally including:
- Written reminders (emails or letters)
- Phone calls
- Negotiations aimed at reaching an amicable agreement to regularize the situation (with a payment plan, for example)
It is estimated that 90% of payment irregularities are settled amicably.³ Indeed, this approach encourages voluntary settlement by the customer without aggravating the situation.
Amicable debt recovery still requires certain resources: trained teams and powerful tools to reduce the processing time (monitoring payment statuses, reminders, etc.) while maintaining personalized support.
When does debt collection apply?
Companies’ business models vary the payment terms offered to customers and, consequently, the resulting method of processing financial flows.
Two pathways justify debt collection intervention:
- The traditional invoice payment pathway, where collection is triggered following a payment default
- The term payment pathway, where collection is integrated from the outset as a component of the process
Collection in the traditional pathway with unpaid amounts
This pathway is the most common: collection occurs when a customer fails to meet the payment terms agreed upon when the contract was signed. This may result from simple negligence or a more structural problem on the debtor’s side.
In this case, the finance and accounting teams play a central role. Using their tools (ERP, invoicing software, etc.), they ensure careful monitoring of receivables. This includes sending reminders, documenting unpaid amounts, and processing payments received (checking, reconciliation, etc.).
But these tasks, while necessary, are often time-consuming and unrewarding for employees. They consume valuable time that could be invested in more strategic tasks, such as optimizing financial processes or analyzing performance.
Collection in the payment in arrears process
In the context of a payment in arrears, collection is not a corrective measure, but an integrated step from the outset of the commercial relationship. As soon as the invoice is issued, the parties agree on deferred payment terms (30, 60, or 90 days from the end of the month). Payment in arrears is then, de facto, considered a debt collection.
This model relies on rigorous monitoring of the payment schedule. The team in charge of collections must closely monitor compliance with the agreed deadlines, while ensuring a healthy relationship with the customer.
In the event of a delay, an informal reminder or a simple exchange is often enough to rectify the situation. However, if payment is not made within the specified timeframe, the company must then redouble its efforts to recover the amounts owed and prevent these delays from impacting its financial health.
How to collect receivables effectively?
Among the threats to company cash flow, debt collection management occupies a central place. Too often neglected, the recovery of amounts owed on orders in production or already fulfilled carries a direct risk of lost revenue.
So, what debt collection strategy should you adopt?
Internalize your debt collection
Internalization is often the first option considered by companies, especially small businesses, because it allows them to maintain complete control over the commercial relationship while personalizing debt collection actions. This method relies on finance and administrative teams to handle all debt collection tasks amicably.
However, this approach quickly reaches its limits when the volume of debts increases or environments become more complex. Indeed, these manual and time-consuming tasks can place a heavy burden on internal resources and lead to a loss of operational performance.
Equip yourself with an integrated debt collection solution
To combine the flexibility of in-house management with the performance of an automated customer payment process, companies can integrate a debt collection solution into their internal processes.
These solutions provide a technological infrastructure similar to that of banks, enabling the collection of customer payments, coupled with powerful automation services designed to improve the daily management of the teams in charge: intelligent monitoring of payment status, automatic processing based on scenarios (customer reminders, transfer reconciliation, etc.), and data communication/synchronization with business tools (ERP, CMS, CRM, etc.).
This type of payment solution for businesses helps increase collection rates, reduce DSO, and add more value to team tasks. Although initial integration may require an investment in training or IT development, this is quickly offset by the benefits provided to the company.
Assigning receivables to a factor
Factoring is a preferred option for companies facing long payment terms or more complex collection issues. This method involves assigning receivables to a specialized company (the factor), which takes charge of the collection process (payment monitoring, reminders, etc.). In exchange, the company immediately recovers part or all of the amount owed, thus improving its cash flow and freeing up time for its teams.
However, this solution comes at a high cost (often in the form of commissions) for the company, which also loses some control over receivables management and customer relations.
Delegating to an external debt collection service provider
Outsourcing is an alternative that involves entrusting all or part of debt collection management to a specialized third party, such as a collection agency or a law firm. This approach is often a last resort, particularly for handling complex debts or in cases of repeated failure. These service providers have in-depth expertise and dedicated resources to maximize the chances of recovering amounts owed, while complying with legal and ethical obligations.
Outsourcing often comes with high costs (often calculated as a percentage of the amounts collected) and a loss of control over customer relationships, which can harm the company’s image.
And when pre-litigation isn’t enough?
In some cases, receivables end up being transferred to litigation. In these situations, having accurate and well-organized data allows for rapid and effective action.
Debt collection is therefore not limited to simple management of unpaid debts. It is a true strategy, which begins at the very beginning of the commercial relationship and, when properly managed, directly contributes to the financial health of the company.
The CentralPay payment solution for businesses simplifies and accelerates collection processes. We support our clients in implementing a tailored debt collection solution, transforming this activity into a strategic lever for the growth and sustainability of the company.
¹ XERFI – Le marché du recouvrement à l’horizon 2026 (2024)
² Altares – Étude de défaillances et sauvegardes des entreprises en France (2024)
³ Internal study
