How Much Does Debt Recovery Cost?
Most commercial debt recovery in Australia operates on a commission-only basis — meaning no upfront cost and no fee if you recover nothing. Here is what to expect and how costs vary.
Commission-only model (most common)
The standard model for commercial debt recovery in Australia is commission-only: the agency takes a percentage of the amount actually recovered. You pay nothing upfront. You pay nothing if the agency recovers nothing. Commission is only charged on money that actually lands in your account.
Commission rates typically range from 10% to 25% depending on:
- Age of the account: older accounts cost more to recover, so attract higher commission rates.
- Amount owed: larger debts typically attract a lower percentage rate.
- Complexity: disputed accounts, missing contact details, or multiple debtors can attract higher rates.
- Whether legal escalation is needed: legal action is additional to the recovery commission.
Typical commission rates
| Account age | Typical commission range |
|---|---|
| Fresh (under 30 days overdue) | 10–15% |
| Aged (30–90 days overdue) | 15–20% |
| Old (90+ days or previously attempted) | 20–25%+ |
| High-volume portfolios | Negotiated |
These are indicative ranges. Always confirm the exact commission rate with your agency before referring accounts. The rate should be agreed in writing before work begins.
Fixed-fee or upfront-fee models
Some agencies charge an upfront fee per account — typically $50–$300 — plus a lower commission rate on recovered amounts. This model suits high-volume, low-value account placements where the agency needs certainty of revenue to justify the administrative cost of each account. It transfers some financial risk to the creditor.
For most SME clients with occasional problem accounts, commission-only is lower risk and easier to budget. You only pay when you get paid.
Legal costs
If recovery escalates to legal action, additional costs apply and are separate from the agency's recovery commission:
- Court filing fees — variable by claim size and jurisdiction ($300–$1,500+)
- Solicitor fees — varies widely, from $2,000 for simple matters to $10,000+ for defended matters
- Enforcement costs — sheriff fees, garnishee applications, court registrations
These costs are typically paid by the creditor upfront or deducted from recovered amounts, depending on the arrangement with the legal partner. Your agency should be transparent about these costs before recommending escalation.
DIY cost (the hidden comparison)
Many businesses underestimate the real cost of chasing debts internally. When you honestly account for staff time — the phone calls, follow-up emails, escalation to management, and dispute handling — a single problem account can easily consume $500–$2,000 in internal labour cost.
Commission-only agency recovery, at 15–20% on a $10,000 debt, costs $1,500–$2,000 in commission — comparable to the hidden internal cost, but with a higher success rate and without consuming your team's time and energy.
What you should not pay for
Any agency charging significant upfront fees for standard recovery should be questioned. Skip-tracing, basic letters of demand, and phone contact should be included in the commission rate. Watch for:
- High upfront registration fees before any work begins
- Fees charged per contact or per letter sent
- 'Investigation' charges applied before recovery commences
- Commission charged on amounts never actually received
A reputable commission-only agency earns its fee only when you get paid. The incentive structure should align with your outcome, not the agency's activity.
Frequently asked questions
What is the typical commission rate for debt recovery in Australia?
For commercial (B2B) debt recovery, commission rates typically range from 10% to 25% depending on the age and complexity of the account. Fresh accounts under 30 days overdue attract lower rates; aged or previously attempted accounts attract higher rates. There is no industry-wide standard — rates are set by individual agencies.
Are there any upfront costs?
With commission-only agencies like Merion, there are no upfront costs. You pay only when we recover. Some agencies charge account registration or investigation fees — ask before engaging.
What happens to the fee if the debtor pays only part of the debt?
Commission is charged on amounts actually recovered. If a debtor pays 50% of a $10,000 account, the agency's commission applies to the $5,000 received. The remainder can continue to be pursued or the account can be closed — depending on the agreement.
Does legal escalation cost extra?
Yes. If recovery cannot be achieved through direct contact and legal action is warranted, court fees and legal representation are separate to the recovery commission. Most agencies provide a referral to a legal partner and clearly explain the additional costs before proceeding.
Ready to recover your debts?
Refer an account today. No upfront fee, no lock-in — commission only if we recover.