| The Bottom Line: The probability of collecting a commercial debt drops significantly after 90 days past due. At current (under 30 days), recovery rates exceed 90%. By 90 days, they fall to around 70-75%. After a year, you’re looking at 20-25% at best. Waiting costs money. The best-run credit departments treat escalation to legal as a policy trigger, not a last resort. |
The Waiting Game Costs More Than You Think
Most businesses treat escalation to legal action as a last resort. They send invoices, make calls, send reminders, try different contacts, maybe bring in a collection agency. Months pass.
The thinking is understandable: “We don’t want to damage the relationship.” Or: “Legal action is expensive and uncertain.” Or simply: “Maybe they’ll pay next month.”
But there’s a cost to waiting that doesn’t show up on the balance sheet. Every week that passes, the probability of recovery drops. The debtor’s financial situation may deteriorate. Evidence gets harder to gather. Witnesses forget details. And the debtor learns that you’re not serious about enforcement.
The data on this is clear. Waiting isn’t patience. It’s a decision to accept lower recovery dollars. Good customer – Bad debt.
Related: Business Debt Collection and the Race Against Time
The 90-Day Cliff: Recovery Rates by Age of Debt
Collection industry data consistently shows the same pattern: recovery probability declines sharply as debt ages. Here’s what that looks like for commercial B2B accounts:
| Age of Debt | Approximate Recovery Rate |
| Current (under 30 days) | 90%+ |
| 30-60 days past due | 85-90% |
| 60-90 days past due | 75-85% |
| 90 days past due | 70-75% |
| 6 months past due | 50-60% |
| 1 year past due | 20-25% |
| 2+ years past due | Under 15% |
The 90-day mark is critical. That’s where recovery rates start falling fast. Every month after that, you’re losing ground.
This isn’t about being aggressive. It’s about being realistic. A $50,000 receivable at 30 days has an expected value of roughly $45,000. At one year, that same receivable has an expected value of $10,000-$12,500. The difference isn’t a collection fee. It’s gone.
Why Companies Wait Too Long
If the data is this clear, why do so many businesses wait six months, a year, or longer before escalating?
“We don’t want to damage the relationship”
This is the most common reason given. But consider: if a customer owes you $40,000 and hasn’t paid in 90 days, what relationship are you protecting? They’ve already decided that your invoice isn’t a priority. That’s not a relationship worth preserving at the cost of your receivable.
“Legal action is expensive”
This was true decades ago. Today, contingency-based collection means you pay nothing unless you recover. The “expense” of legal action is a percentage of money you wouldn’t have collected otherwise. That’s not a cost. That’s a good deal.
See our contingency-based collections page for details.
“Maybe they’ll pay next month”
Hope is not a collection strategy. If internal follow-up hasn’t worked in 60-90 days, there’s no reason to believe month four will be different. What changes is that your recovery probability keeps dropping.
“We’re still talking to them”
Ongoing communication is good. But if those conversations aren’t producing payment or a concrete payment plan, they’re just delay tactics. Some debtors are very good at keeping you on the phone while never actually paying.
A Simple Decision Framework
The best credit departments don’t make escalation decisions on a case-by-case emotional basis. They have a policy. Here’s a framework that works:
Days 1-30 (from Invoice Due Date): Internal Follow-Up
- Invoice reminders
- Phone calls to AP contact
- Email follow-up
- Document all communication
This is standard AR work. Most accounts that are going to pay will pay in this window.
Days 31-60: Escalated Internal Follow-Up
- Escalate contact to supervisor, controller, or owner
- Send formal written demand (first-party)
- Request payment plan if appropriate
- Flag account for potential escalation
If there’s a legitimate dispute, this is when you’ll hear about it. If there’s a cash flow issue, this is when you’ll learn the real situation.
Days 61-90: Decision Point
At 60-90 days, you should have a clear picture:
- Paying: Account is current or on a working payment plan. Continue monitoring.
- Legitimate dispute: There’s a real issue with the product, service, or invoice. Resolve it internally or escalate to legal for contract interpretation.
- Non-responsive or stalling: They’re not paying, not disputing, just waiting you out. Escalate to attorney-led collection.
| The 90-Day Rule: If an account reaches 90 days past due without payment or a concrete resolution path, it should automatically go to legal. This isn’t a judgment call. It’s policy. |
Day 91+: Attorney-Led Collection
- Attorney demand letter on law firm letterhead
- Legal review of contract and claim
- Preparation for litigation if demand is ignored
- Lawsuit filing, judgment, enforcement as needed
Triggers for Immediate Escalation
Some situations warrant escalation before 90 days. Move immediately to attorney-led collection if:
- The debtor is showing signs of financial distress. News of layoffs, office closures, or other creditors circling. You want to be first in line, not last.
- The debtor has gone silent. Not returning calls, not responding to emails, office seems abandoned. This often precedes bankruptcy or dissolution.
- You learn of other unpaid creditors. If they’re not paying you, they’re probably not paying others. The race to judgment is on.
- The balance is very large relative to your exposure. A $200,000 receivable from a single customer deserves faster action than a $15,000 balance spread across routine invoices.
- The debtor is clearly acting in bad faith. Bounced checks, broken promises, contradictory stories. Don’t wait for them to run out the clock.
- A statute of limitations is approaching. Contract claims typically have 4-6 year limits depending on state. Don’t let the clock run out.
Escalation as Fiduciary Duty
For CFOs, controllers, and credit managers, there’s a fiduciary dimension to this decision.
Receivables are company assets. Allowing them to age without action is allowing company assets to depreciate. The data shows exactly how much value is lost with each passing month.
Having a clear escalation policy, documented and followed, is good governance. It removes emotion from the decision. It ensures consistent treatment across accounts. And it protects the company’s cash flow.
The question isn’t “Should we escalate?” The question is “At what point does failing to escalate become negligent?”
For most commercial receivables over $10,000, that point is 90 days.
How We Help
At Stevens & Ricci, we handle the escalation steps. When your internal process has run its course, we step in with attorney-led collection:
- Attorney demand letter on law firm letterhead, with real legal consequences
- Seamless escalation to litigation if the demand is ignored
- Nationwide coverage through our attorney network in all 50 states
- Contingency-based fees so you pay nothing unless we recover
- 72% recovery rate on commercial accounts (vs. ~28% industry average for agencies)
For more on how attorney-led collection compares to traditional agencies, see: Collection Agency vs. Attorney-Led Commercial Debt Collection
Ready to Escalate?
If you have commercial receivables over $10,000 that have reached the 90-day mark, don’t wait for them to become 180-day problems. We’ll review your case at no cost and tell you honestly whether attorney-led collection makes sense.
Place Your Account | Contact Us
Stevens & Ricci is a national, attorney-led commercial debt collection firm. We focus exclusively on B2B debts of $10,000 and above, operating on a contingency basis. We are not a collection agency.
