When businesses face delinquent receivables, one of the first questions is whether contract clauses like arbitration will provide an advantage in resolving disputes. While arbitration is often marketed as faster and more confidential, in practice it can create costly detours that slow down recovery.
By contrast, contingency-based commercial debt collection litigation often delivers stronger, enforceable results, particularly for B2B debts of $10,000 and above.
Arbitration Clauses For Debt Collection: Theory vs. Reality
On paper, arbitration sounds like a practical option. It’s supposed to offer speed, privacy, and flexibility. In reality, many businesses have a very different experience:
- Higher costs than expected: Filing fees and arbitrator rates often exceed civil court costs, especially when using large providers like the American Arbitration Association (AAA).
- Weak enforcement: Even if you win an arbitration “award,” collection depends on the debtor’s willingness to pay. If they refuse, you may end up in civil court anyway.
- Debtor stall tactics: Savvy debtors sometimes use arbitration to delay resolution, draining time and resources.
- Boilerplate risks: Many companies insert generic arbitration language without tailoring it to their industry or customer base, leading to unenforceable or debtor-friendly terms.
Arbitration may make sense for large corporations with dedicated in-house legal counsel or complex disputes, but for many businesses it often becomes an expensive and time consuming sidetrack rather than an effective solution.
Why Contingency-Based Commercial Litigation Works Better
At Stevens & Ricci, we’ve processed thousands of commercial cases across industries such as technology/SaaS, manufacturing, wholesale, and professional services. Our experience shows that attorney-driven, contingency-based litigation consistently outperforms arbitration in recovering receivables.
Here’s why:
- Real legal pressure: A lawsuit backed by an attorney carries more weight than an arbitration hearing. The prospect of judgments, levies, and asset seizure drives faster settlements.
- Enforceable outcomes: Court judgments allow for tangible enforcement tools like bank levies or property liens, something arbitration cannot provide.
- Aligned incentives: With a contingency-based model, you pay nothing unless we collect and without the large up-front costs of arbitration. This reduces your risk and ensures our team is motivated to maximize recovery.
- Lower barriers to entry: Unlike arbitration with its high filing fees and hourly arbitrator costs, contingency-based litigation typically requires minimal upfront investment.
A Smarter Path for B2B Creditors
For B2B receivables of $10k or more, arbitration rarely delivers the cost-effective results businesses expect. In our decades of practice, we’ve found that attorney-driven, contingency-based litigation is the more reliable path to recovering what’s owed while controlling risk.
If your business, whether in software, SaaS, manufacturing, wholesale, or professional services, is struggling with unpaid invoices, it may be time to consider a legal strategy designed for results, not delays.
With over 30 years and thousands of cases handled, Stevens & Ricci brings a unique and proven combination of legal collection expertise and contingency-based commercial debt collection experience.
Contact our legal desk today to find out how contingency-based commercial debt collection can work for you.
