If your business has been writing off bad debts without involving a Collection Agency, you might be leaving significant revenue on the table.
Many business owners believe that once a debt is “written off” for tax purposes, it is gone forever. This is a myth. A “write-off” is usually just an accounting entry to clear your books. Unless you have legally “forgiven” the debt in writing to the customer, they still owe you money, and you still have the right to collect it.
Here are the 8 most common reasons small businesses prematurely write off debt—and why you should reconsider.
1. “We’ve never used an agency before.”
The Fear: You are unsure what a Collection Agency actually does or if it’s worth the effort.
The Fact: You need to hire a professional to see the difference. A collection agency acts as an extension of your back office, immediately improving your cash flow by applying professional, consistent pressure that internal staff simply cannot replicate.
2. “It seems like too much hassle.”
The Fear: You think onboarding an agency involves complex paperwork and software integration.
The Fact: Modern collection agencies take the stress off your plate. We accept accounts via simple online portals or spreadsheets. Once you hand it over, we do the work. Your in-house employees cannot match the efficiency and recovery rates of a dedicated team equipped with skip-tracing tools and legal expertise.
3. “We’ll just make up the loss with new sales.”
The Fear: You accept the loss and try to offset it by getting new orders.
The Fact: This is dangerous math. If you have a 10% profit margin and write off a $1,000 debt, you don’t need $1,000 in new sales to break even—you need $10,000 in new sales just to recover that one loss. Recovering the cash you already earned is far more profitable than chasing new clients.
4. “Management won’t approve it.”
The Fear: Accounting and Receivables departments often struggle to convince Owners or CFOs to change company policy and assign accounts over 90 days past due.
The Fact: Cash flow is the lifeblood of a business. Management needs to understand that holding onto old debt doesn’t save money; it costs money in inflation and administrative time. (See our guide: Is Management Ready to Hire a Collections Agency?)
5. “We don’t know who to trust.”
The Fear: Choosing the wrong partner feels risky.
The Fact: Nexa Collections specializes in ethical, effective recovery. We are transparent about our methods and results. You don’t need to search endlessly; we are ready to help you today.
Need a Collection Agency? Contact us
6. “The commission fees are too high.”
The Fear: Since agencies charge contingency fees (a percentage of what is collected), owners are reluctant to “share” the money.
The Fact: Ask yourself: Would you rather have 100% of nothing, or 60% of something? Many businesses sit on these accounts until they become legally uncollectible (Statute of Limitations), resulting in a 100% loss. No agency recovers every dollar, but we will recover significantly more than zero, which is what you get if you do nothing.
7. “We don’t know when to send the account.”
The Fear: Waiting too long or acting too fast.
The Fact: The earlier you transfer, the better.
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Best Practice: Transfer accounts after 60–90 days of non-payment.
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Acceptable: Accounts under 1 year old are still very collectible.
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Too Late: Accounts older than 3 years generally result in low recovery rates.
8. “It will ruin our reputation.”
The Fear: A Collection Agency will spoil the business relationship with customers. The Fact: This is the biggest myth of all. Professional agencies pursue a diplomatic, amicable, yet firm approach. We cannot threaten or harass; it is against federal FDCPA laws. We work with the debtor to find a solution (like a payment plan) rather than working against them. Our goal is to recover your money while preserving the relationship for future business.
The Bottom Line: It’s Not Too Late
To attempt the recovery of bad debts previously written off, they should be assigned to a collection agency without further delay. As long as the debt is within the Statute of Limitations for your state, there is still hope.
Don’t let your hard-earned revenue vanish.