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Dear SaaStr: My Customer Hasn’t Paid. When is it Worth it to Hire a Collections Agency?

  • It is almost never worth it to hire a collections agency in SaaS as it can destroy the relationship with the customer.
  • Collections agencies charge a significant percentage of the amount collected and often rely on threats rather than successful recovery.
  • In SaaS, the effort put into managing the collections process usually exceeds the potential rewards, making it more effective to focus on acquiring or retaining customers.
  • Instead of going straight to collections, steps like escalating internally, offering payment plans, or leveraging service access can be more effective in recovering payments without damaging relationships.

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