No Collection, No Commission Versus No Win, No Fee

What is the difference between No Collection, No Commission & No Win, No Fee?

No Collection, No Commission -Versus- No Win, No Fee

So many choices...We’ve all heard these terms banded about generally but what do they really mean in the debt collection industry?

What are the pros and cons of the different charging structures?

These are both great questions!

We are going to address the elephant in the room with our explanation of what we perceive these to be.

In this article, we'll talk about the differences between the two charging structures and the information you will need to consider before instructing a debt collection agency; the questions you should be asking when deciding which one to use, and general price structure as to what you'll likely spend. By the time you're finished reading this, not only will you have a clear sense of budget, but you’ll finally be also on the path of getting your debt recovered and be well informed! Let's dive in.

With over 20 years of experience, we’ve come across the various ways that debt collection agencies offer their services.

So, just to be upfront and to clarify...

  • No Collection, No Commission
  • No Contracts to Sign
  • No Upfront Payments * (see below)
  • No Monthly or Annual fees
  • Commission Rate Agreed Upfront
  • Commission Rates From 5% (Lowest Industry Standards)
  • No Additional Costs Unless Approved By You

Firstly, No Collection, No Commission means exactly what it says on the tin. If an agency works on that basis, then they should not charge you any commission unless a recovery is made. That said, this does not necessarily mean that there will be no costs incurred. For instance, if tracing, asset checking, legal or insolvency action is required then there will be associated costs. A reputable debt collection agency will give you the various options and associated costs and only once they are agreed will they take that course of action. This means that a debt collection agency offering this type of service can have lower fees on the basis that their only risk is their time. Further information about this can be found on our Pricing page. For the avoidance of doubt, our services at Athena Collections are based on the No Collection, No Commission model.

Moving on to No Win, No Fee. This charging structure insinuates that there will be no fees whatsoever unless a recovery is made. Technically speaking this may be true however it also suggests that the debt collection agency will take on the financial risk in doing whatever it takes to recover your debt, including tracing, asset checking, legal or insolvency action etc. This means that the debt collection agency can charge a lot more than your typical No Collection, No Commission model. What they don’t tell you is that most of the time they won’t incur any ‘hard costs’ in taking any of the abovementioned actions other than their time costs for the simple reason they cannot justify doing it because they have never dealt with the debtor before, not done any due diligence and they are totally relying on your due diligence, if any has been done at all.

Ask yourself this, would you spend your hard-earned cash on something or someone that you have not checked out? Not knowing us, would you give us a £20,000 loan without finding out first if we had the means and ability to pay you back? 99.9% of the time, the answer will be no, so how could a debt collection agency be expected to do the same. That said, they will still charge the higher commission rate in the hope they collect the debt and if they don’t collect it then recommend it be written off. In essence, these debt collection agencies do exactly the same as a No Collection, No Commission debt collection agency but charge more for the privilege.

Regardless of whether it is No Collection, No Commission or No Win, No Fee, some companies will charge an upfront fee for taking on the case, administration fee or even their entire fee upfront. Our recommendation is to do your due diligence first and then run a mile! Think about it, why pay someone upfront? Once they have had your money, then technically speaking they are not incentivised to collect your debt and they will only go through the motions to show that they have acted accordingly otherwise they would be on the receiving end of multiple fraud claims. If they manage to collect the debt, then it’s only a by-product and not because they had a vested interest in your case. We would strongly recommend against paying anything upfront.

The only exception to this rule would be an Administration charge or Handling Fee for debts of a very low value. Ultimately, debt collection agencies are in business to make a profit and therefore commission, say on a £200.00 debt will not come close to covering the administration costs of onboarding the client, due diligence, setting up the case, stationery, postage, time costs etc…

Before you sign up or instruct a debt collection agency, be sure to go thoroughly through their terms and conditions to ensure there are no surprises!

Can Debt Collection costs be added to the debt? We will cover this in a separate article which you can find here.

If you want further information about how we can possibly help, then fill in the form below and one of our representatives will contact you to discuss your requirements.

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