Ultimate Guide to B2B Collections

As the CEO of Accountgram, a B2B debt collection specialist with 92 collections under my belt since June 2024, I want to provide you with a no-nonsense breakdown of everything I know about B2B collections. I’ll also show you exclusive receipts from a collection made by Atradius, a €2.5B revenue debt collection company.

Before I begin, let me clarify that this entire guide primarily applies to the US (though most of it can be applied to other countries) except in the EU due to GDPR regulations. Also, I'm going to assume that you are a new CFO in a growing company. If not, you’d already know this stuff, and you shouldn’t be taking advice from the CEO of a budding debt collection startup.

In my opinion, the B2B collection process is akin to a sales process where your job is:

1. to understand why your debtor is not making payments
2. to make him/her understand how he/she will stand to lose if payment isn’t made

Most B2B collections are stuck in step 1. Short of legal action, they never progress to step 2, which is why most debt collection companies fail to provide meaningful collection results. But let’s not jump ahead of ourselves. Let’s go back to basics:

How Are B2B Collections Done?

At a high level, the B2B collection process (whether by 1st party or 3rd party) is usually conducted as follows:

1. Dunning
   • Send demand letter
   • Multiple avenues of contact, including phone calls, emails, or in-person visits
2. Negotiation
3. Escalation

Let’s dive deeper.

Dunning

This is how the first dunning email from a multi-billion-dollar revenue Atradius looks:

Your reference : <CENSORED>
Case Number : <CENSORED>
Outstanding Amount : <CENSORED> USD
Re : <CENSORED>
Dear Sirs,
We have been advised by <CREDITOR> that the amount shown above is overdue for payment and have been instructed to collect this debt, which may also include interest and additional collection costs.
You will find enclosed a detailed statement of account. Please return the document to
us duly signed and sealed with the notice “debt acknowledged”.
We hereby demand payment of the full outstanding debt within 15 days following receipt
of this letter into ATRADIUS COLLECTIONS bank account 00050-042390-001-45-USD SWIFT
Code BNPASGSG BNP PARIBAS 20 COLLYER QUAY #01-01 049319 SINGAPORE, stating reference
number <CENSORED>.
If you prefer to pay by check, we instruct you to make the bank check(s) payable to
ATRADIUS COLLECTIONS.
To make payment we have created a personal account for you. Use this link and follow
the instructions to login and make payment.
https://www.atradius.com/debtor/login.do?token=<CENSORED>
We urge you to comply with our request in order to avoid any further costs or actions.

If payment has already been made, please inform us immediately.
Sincerely,

<CENSORED> Atradius Collections Pte Ltd Tel. : <CENSORED> <CENSORED>@atradius.com

This is how we do it:

Hi <DEBTOR>,

I hope this email finds you well!

We have noticed that your payment failed for the Prorated cancellation fee for the 12-month contract (Nov 2024 – Jul 2025), which amounts to $392. Would you like to fix this by making a payment?

If you need help with payment or have any questions at all, you can hit reply or email collection@accountgram.com, and we will get back to you as soon as possible!

Dunning is a process used during B2B collection that involves systematically communicating with debtors through reminders to encourage them to settle outstanding debts. Personally, dunning is just a nicer way of saying nagging. The goal of dunning is to get them to respond and to understand why they are not paying.

Figure out where the customer is coming from—it could be a product/service problem, or they might be experiencing cashflow issues. In that case, you can either fix their issues or put them on a custom payment plan. These are the lowest-hanging fruits and the best possible outcomes because:

• You retain a happy (and potentially long-term) customer.
• You get paid.

Negotiation

This is how negotiation looks:

Creditor:

There are still eight months remaining on the $49/month subscription, totaling $392. As an alternative, you may pay this amount upfront, and we can convert it into PAYG credits at PAYG rates. These credits will not expire unless the account remains inactive for 18 months. Please let us know if you would like to proceed with this option.

Debtor:

Hey <CENSORED>! Thank you so much for this message and for walking us through this.

You have a deal. We will pay the remaining $392 to close out of our $49/month agreement.

Before we do that, can you please cancel our current monthly subscription of $299/month? It renews for the next month on Feb 20th.

I don't want to be hit with paying $299 and then another $392 to end our agreement. If you can do that, that would be great. Thanks!

If you are lucky, the debtor will respond during the dunning process and explain why they’re not making payments. It’s often due to cashflow issues or dissatisfaction with the product/service. That’s where negotiation begins.

The debtor might propose a payment plan if they can’t pay in full right away. You’ll negotiate with the debtor on late fees, interest, total balance, or other terms if you authorize any concessions.

But what if the debtor is unreasonable or simply doesn’t respond?

Escalation

Bad actors know that dunning is, at worst, annoying. They figure you’re not going to sue them over something like $392. And they’re often right because between $1 and $10,000, there aren’t many options beyond a legal claim. Which is why we created Accountgram—to provide escalation options beyond just “nagging better.”

For most other agencies, “escalation” essentially means:

1. Sending final notices or warnings of possible legal action.
2. Spending money to take legal action.

And yes, I have taken legal action against bad actors who decided to interpret legal documents however they wanted. Here is the COO of a company doing $10M in ARR:

Hi Steven,
I followed your recommendation and had a lawyer review the sales agreement. He informed me that the agreement can be terminated after written notice, as stated in Article 5.1 of Section 5. Since this notice has already been sent, the agreement is now considered terminated.
That's what the lawyer told me.

This is Article 5.1/5.2 of Section 5:

Termination for Breach: Either party can terminate the agreement on 30 days' notice if the other party materially breaches the agreement (or immediately if there is non-payment).
Payment Obligation: Even if terminated early, the customer is still responsible for paying for the services provided up to the date of termination.

I followed up more than 10 times with this COO, and he ghosted me. Until I spent the money and filed a small claim against his company. Shortly after serving notice of the legal claim, the CEO reached out:

Hi Steven,

I hope you're doing well. It was just a few days ago that it came to my attention you filed a claim to collect payment for the Q4 invoice of 2024.

I was not aware of the situation regarding the cancellation, as this had been managed by my operations team. Only today did I see your correspondence with Nick and his ignoring of your follow-up email.

Would you be open to jumping on a quick call to discuss this matter? I hope we can resolve it together.

I could suggest tomorrow at 3 pm CET. Additionally, 12 am and any time from 3 pm to 5 pm CET work for me. I can also do Monday any time after 5 pm and Tuesday any time from 1 pm to 5 pm CET.

Yes, we collected the money (~$8000) including late fees. I was lucky the CEO was cooperative. If not, litigating and enforcing the collection might have cost more than $8000.

That’s the beauty of Accountgram. For sums between $1–$10,000, there really isn’t a great way to escalate and collect. Accountgram provides an alternative path to escalation before legal action. Essentially, we post debts publicly in our well search-optimized public debt database, causing reputational harm for debtors. If that doesn’t work, we escalate to the debtor’s employees and relevant customers. We’re able to do this thanks to our proprietary Global Customer Database, which maps out a large portion of B2B relationships in the US.

Collect Yourself

You don’t have to hire a 3rd-party collection agency. For small sums below $10,000, most agencies will be reluctant to take the case anyway. You can do it yourself.

To collect a fresh bad debt, refer to the collection process I just detailed. I’ll summarize it here:

1. Have your Accounts team send a demand letter (by email or post) to the debtor.
2. Follow up multiple times; each incremental dunning message should be firmer than the last.
3. Negotiate and (hopefully) finalize collection.
4. If ghosted or no concessions are offered, escalate by:
   • Posting the debt publicly on your company’s website (ensure you’re not breaching any regulatory frameworks; you can’t do this for EU-based companies or individuals).
   • Reaching out to the debtor’s employees and vendors.
5. If the customer remains firm in not paying and the amount justifies it, engage legal counsel and file a civil lawsuit.

That said, if you prefer to focus on growing your business, know that Accountgram isn’t like most debt collection agencies. We don’t discriminate based on the balance, nor do we require any upfront fees. You pay a 25% fee only on debts we successfully collect.

Pursuing Legal Action

Legal action is expensive. You should only consider it if the sum to be collected is far above the cost of legal fees and if it’s clearly not a disputed debt, with an obvious breach of contract. Apart from the “Accountgram method,” legal action is the only other approach with real teeth.

In this section, I’ll talk about Small Claims, focusing on the California jurisdiction. Here are the ideal requirements to file a small claim in California:

1. Claim amount <= $12,500
2. You can show up in court

Don’t be like me—I couldn’t physically show up in a California court, which jacked up my legal costs. But if you meet the requirements above, the legal fees to file a small claim can be manageable. In my case, it was $850, around 10% of the owed sum.

I personally wouldn’t recommend going this route for most debts because it’s expensive, slow, and not guaranteed to result in actual collection. I sued one company because I was so incensed that they:

1. Were making good money,
2. Had already received so many discounts and concessions from us,
3. And had a total disregard for the contract.

I just had to do it.

I can’t give more advice on civil legal action beyond small claims because I don’t have experience there.

Third-Party Debt Collection Agencies

Bad debts are an irrefutable fact of any business. So it makes sense to have a third-party debt collection component in your accounts receivables workflow. Here are a few options:

Debt Collection Software Platforms (SaaS)

These platforms are typically software that automates the dunning process—reminder emails, texts, calls—and tracks accounts receivable in a structured, compliant manner. Examples include Tesorio, Gaviti, Upflow, and others. In general, these platforms help you “nag better.” And nagging does work to some extent.

These platforms suit situations with a high volume of small overdue accounts. The drawback is you have to pay to use them regardless of whether they successfully collect the debt.

Some examples of Debt Collection Software Platforms: Tesorio, Gaviti, Upflow, and others.

Debt Collection Big Corps

The big boys of debt collection are essentially large corporations offering Trade Credit Insurance, which guarantees payouts from invoices you issue. For these companies, debt collection is core because they need to claw back funds on bad invoices that they’ve already insured.

Enterprises usually have their revenue insured because bad debts are an irrefutable fact of any business. They pay a small premium on each invoice to credit insurance companies like Atradius, who will pay out on bad invoices—but also try to claw them back afterward.

Credit insurance companies include names like Atradius, Euler Hermes, and Coface. They’re suitable for larger businesses with broad customer bases, including international markets with significant receivables exposure.

Traditional Debt Collection Agencies

These agencies specialize in pursuing delinquent accounts on your behalf, often on a contingency basis (they take a percentage of what’s recovered). For most people, this is what comes to mind when they think of debt collection.

They’re generally experts in collection tactics, but they tend to prefer high-value invoices. These agencies are suitable for SMBs that have a single large overdue account. However, they don’t typically scale well within an overall accounts receivable workflow.

Some examples of traditional debt collection agencies: IC System, ABC-Amega, Transworld Systems Inc, Midland Credit Management

Accountgram

Accountgram combines the efficacy and escalatory tactics of traditional debt collection with the scalability and efficiency of Debt Collection Software. We leverage software automation for efficiency and data-driven escalation tactics to spur higher success rates. Strategies like public debt disclosure and direct notifications to customers/employees give Accountgram’s debt collection a success rate of 31.25%.

We also don’t discriminate based on invoice amounts.

Accountgram is suitable for tech-native SMBs and mid-market companies with a fair amount of bad debts.

Try Accountgram Today!

The Accountgram method is how I, the CEO of Proxycurl (a 60-employee startup), reduced our SaaS churn from 14% to 3% and grew our bootstrapped company to $8M ARR—simply by enforcing contracts and collecting on bad debts.

With Accountgram, we’ll collect any amount for you with no upfront fee. We only take 25% of any sum collected.

We focus on the US and Singapore markets. If you’re an SaaS SMB with bad debts to collect, sign up for Accountgram right now, upload your invoice, and we’ll handle the rest!

Questions? Send us an email at hello@accountgram.com!