What is the cost to collect?

Cost to collect is the total internal cost of chasing overdue accounts — the staff time spent following up, plus collections software, skip-tracing, letters and any legal spend. Expressed per account or as a share of what you recover, it is often far higher than businesses expect, because staff time is the largest and least-visible component.

Why is chasing debt in-house so expensive?

The cost is incurred whether or not the account is ever paid. Every hour spent on the phone or writing letters is an hour not spent on billable or revenue-generating work, and the loaded cost of that time — salary plus on-costs — adds up quickly across a month of overdue accounts. Unrecovered accounts still cost you the full chase.

How does commission-only recovery compare?

On a commission-only basis, the fixed cost of chasing is effectively zero: you pay a percentage only on money actually recovered, and nothing on accounts where nothing is collected. The calculator shows your in-house monthly cost next to the commission you would pay on the same recovery, so you can compare like for like.

Cost-to-Collect Calculator — What Chasing Debt Really Costs You

What chasing debt costs you

Staff time (labour) per month$2,750

Total cost to collect — per month$3,150

Total cost to collect — per year$37,800

Cost per account chased$126

Cost as a share of what you recover7%

On commission you'd pay (only on what's recovered)$8,800

In-house cost is incurred whether or not the account is recovered. Commission is only ever charged on money actually recovered — no recovery, no fee. Figures are indicative estimates for illustration, not a quote; your actual commission rate is agreed in writing first.

The hidden cost of chasing debt in-house

Most businesses treat debt collection as a free activity — it is just someone in accounts making a few calls. But that time has a real, calculable cost, and unlike a commission, you pay it whether or not the money ever comes in. Once you add up the hours across a month of overdue accounts, the true cost to collect is often a surprising share of what you actually recover.

Staff time is the biggest cost

The single largest component is almost always labour. Every follow-up call, chase email, reconciliation and dispute costs a portion of a salaried person's day — and that person's loaded cost includes super, leave and overheads, not just their base wage. Multiply that by the number of accounts and the hours each one absorbs, and the figure climbs fast.

You pay it whether you recover or not

The critical difference from a commission model is certainty of cost. An account you chase for a month and never recover still cost you a month of chasing. The in-house cost is fixed and sunk; commission is contingent — charged only on money that actually lands in your account.

The opportunity cost

Beyond the direct cost is what that time could have earned elsewhere. Hours spent chasing debt are hours not spent winning work, serving customers or building the business. For a growing business, that opportunity cost frequently outweighs the direct cost of the chase.

This calculator provides indicative estimates for illustration only. It is not financial advice or a quote. Your actual costs and recovery rates depend on your circumstances; Merion's commission rate is agreed in writing before any work begins, and no commission is charged on accounts where nothing is recovered.

What is chasing debt really costing you?

Your in-house collection effort