Blog · October 5, 2026

How to send an unpaid invoice to collections — and what a collection agency actually is

If a client has stopped answering about an overdue invoice, collections is the usual next step. Here's what a collection agency does and how to hand over a debt the right way. General information, not legal advice.

What is a collection agency?

A collection agency is a company that recovers unpaid debts for someone else. You (the creditor) give it the details of an overdue invoice; it contacts the debtor by letter, phone and email, negotiates payment, and sends you the money it recovers minus its fee.

How they're paid: most work on contingency, keeping roughly 25–50% of what they collect. No recovery, no fee.
First-party vs third-party: first-party agencies chase debts under your name early on; third-party agencies take over the debt under their own name.
Debt buyers: some firms buy the debt outright for a fraction of its value — you get less, but get it now.
Rules: many states require agencies to be licensed and bonded. Consumer-debt collectors also follow the federal Fair Debt Collection Practices Act; business-to-business debts are mostly governed by state law.

How to send an unpaid invoice to collections

Confirm it's really overdue. Check the due date, payout history and any partial payment.
Send reminders. At least two dated reminders with the invoice attached.
Send a final written demand. Amount, invoice or work order number, a 7–10 day deadline, and notice that the debt will go to collections.
Check your contract. Arbitration, notice or platform dispute steps may be required first.
Choose a licensed agency. Confirm licensing in the debtor's state and get the fee in writing.
Hand over a complete file. Contract or work order, invoice, proof of completion, messages, and your demand letter.
Track and record. Note any recovery as income; if nothing comes back, see our write-off guide.

Alternatives to a collection agency

For smaller invoices, small-claims court often costs less than an agency's cut. If the unpaid invoice came from a platform like Field Nation, you can also submit a free claim on the case page so it's counted with other providers' records.