A $20,000 debt and two recovery quotes: compare what you will keep

The quoted percentage is only the starting point

You have a $20,000 unpaid account and two recovery proposals. One advertises a small initial fee; another charges a percentage of money collected. Neither headline tells you what you would keep after fees, which steps are included or what happens if the customer pays directly. Ask for a written scope before selecting a service.

Business.gov.au recommends considering debt collection options and checking their fees. The practical task is to compare the quotes on the same assumptions. Keep the underlying debt and any genuine dispute visible. A pricing comparison does not establish that the proposed recovery method is legally suitable or that any amount will actually be recovered.

Calculate the fee at more than one recovery amount

Consider a hypothetical comparison excluding GST, other costs and any legal-cost recovery. Quote A charges a fixed $1,000 for the specified stage. Quote B charges 20 per cent of principal actually collected, with no other fee in this example. If $20,000 is collected, the fees are $1,000 and $4,000 respectively, leaving $19,000 or $16,000 after those fees.

If only $4,000 is collected, the example fees become $1,000 and $800, leaving $3,000 or $3,200. That does not prove one service is better: scope, timing and collection outcomes may differ. Confirm the real fee base, GST treatment and exclusions. Do not present a possible recovery as a forecast or assume that your costs can be charged to the debtor.

Source: Official guidance

Ask what happens when the customer pays you directly

Read the proposed engagement terms for direct payments, instalments, cancellation and work already performed. Ask the provider to explain how each would be billed in your case. A customer paying your bank account does not tell you what the service contract says about fees. Get the explanation recorded before you appoint the provider.

Also ask who keeps the account reconciliation current. If an instalment arrives, the collector needs accurate figures before the next contact. Identify the reporting frequency and who can approve the next chargeable stage. If a term is unclear or its legal effect matters, have an independent adviser review the actual agreement rather than relying on the advertising summary.

Compare the work, not just the fee total

List what each quote covers: initial demand, telephone follow-up, document review, a statutory construction payment claim where available, or preparation for a civil claim. These are not interchangeable services. Business.gov.au explains that construction payment laws differ between states and territories. Ask whether the proposed service includes checking the applicable eligibility, service requirements and time limits.

A company statutory demand needs separate suitability advice. Federal Court guidance identifies the $4,000 statutory minimum and grounds for setting a demand aside, including a genuine dispute. An amount above the threshold is not enough to establish suitability. If a civil claim is proposed instead, ask about the relevant jurisdiction, filing fees and costs if it is defended.

Choose the next authorised stage and a review point

Before signing, complete one comparison sheet showing scope, fee base, direct-payment treatment, extras and the point where fresh approval is needed. Add your own expected time commitment separately from cash fees. A useful stop point is when the agreed stage ends or material new information arrives, subject to checking any urgent deadline with an appropriate adviser.

Today, request the missing terms from the two providers and calculate both partial and full-recovery examples using their actual quotes. Contact CRP about debt recovery if you need help coordinating a suitability and cost assessment. Bring the debt reconciliation, dispute details and written proposals. CRP works with independent qualified professionals and does not promise a particular recovery or saving.