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CollectionsThe cheapest rate on the bid sheet can net you the least. Here's what moves a contingency rate, published ranges by source, and the net-back math that shows what you keep.
Agencies price by account age, balance, volume, placement history, legal work and compliance scope. Published contingency rates run 20% to 50% of amounts recovered (IC System, 2022, updated 2025, vendor-quoted). What you keep is net-back, meaning dollars recovered minus fees and other costs, as a share of dollars placed. Compare agencies on that.
A contingency rate prices how hard the accounts are to collect and how much work the contract asks for. Here are the levers, with a published example where one exists.
| What moves the rate | Which way it moves | Published example |
|---|---|---|
| Account age | Older accounts cost more | IC System's rate card: 35% on recoveries in days 1 to 180, then 50% from day 181 (vendor price list, page updated Dec 2025) |
| Balance size | Larger balances are often quoted lower | Southwest Recovery: commercial claims over $10,000 at 10% to 25% (vendor-quoted, 2026) |
| Volume | Steady, larger placements get lower rates | Redial BPO: high-volume accounts 5 to 10 points lower (vendor-quoted, 2026) |
| Placement history | Accounts another agency has worked cost more | NACM Commercial Services: 50% on second placements (placement terms for western states, posted June 2025) |
| Account condition | Judgments, returned mail and bad checks raise the rate | IC System fee guide (vendor, 2022, updated 2025) |
| Legal action | Accounts sent to an attorney move to a higher rate, and court costs are often billed on top | NACM Commercial Services terms (2025); Redial BPO (vendor-quoted, 2026) |
| Channel mix and compliance scope | Letters, calls, texts and email cost different amounts to run, and audit, reporting, licensing and data security terms add work | No published figure. Ask each agency to show the effect in writing |
2 agencies can quote different rates for the same file because they weigh these factors differently. TSI quotes each third-party collections program after reviewing the accounts.
Every vendor range below comes from an agency's own website, so read the ranges as the span of quotes you're likely to see.
| Source and type | What it says | Unit | Date |
|---|---|---|---|
| IC System fee guide (vendor-quoted) | Most agencies charge 20% to 50% | % of dollars recovered | Sep 2022, updated Oct 2025 |
| IC System rate card (vendor price list) | 35% in days 1 to 180, 50% from day 181, plus a $75 setup fee | % of recoveries | Page updated Dec 2025 |
| Southwest Recovery (vendor-quoted) | 10% to 50% for commercial collections; 10% to 25% for claims over $10,000 | % of amount recovered | Feb 2026, updated Jul 2026 |
| Redial BPO (vendor-quoted) | Consumer debt under 90 days, 20% to 30%; 90 to 180 days, 25% to 35%; over 6 months, 30% to 50%; over 1 year, 40% to 50% or more; balances of $50,000 or more, 10% to 15% | % of amount recovered | May 2026, updated Jul 2026 |
| NACM Commercial Services (placement terms, western states) | 50% on second placements | % of amounts collected | Posted June 2025 |
| 26 U.S.C. 6306(e) (federal law) | The IRS may keep up to 25% of collections to pay its private collection contractors | % of amounts collected | In effect; subsection last amended Dec 2015 |
| TIGTA report 2025-300-004 (government audit) | Commissions paid came to about 17% of collections (TSI calculation from TIGTA's figures) | % of collections | Dec 2024 |
Net-back = dollars placed × liquidation rate × (1 − contingency fee) − other costs you pay. The liquidation rate is the share of placed dollars collected over a set period. Divide net-back by dollars placed and you can compare agencies of any size.
3 illustrative agencies, each given $1,000,000 in placements, with no other costs:
| Agency | Contingency fee | Liquidation | Collected | Fees | Net-back | Net-back as % of placements |
|---|---|---|---|---|---|---|
| A | 19% | 11.0% | $110,000 | $20,900 | $89,100 | 8.91% |
| B | 25% | 11.5% | $115,000 | $28,750 | $86,250 | 8.63% |
| C | 25% | 12.0% | $120,000 | $30,000 | $90,000 | 9.00% |
B charges 6 points more than A and liquidates half a point more, and it nets less. C charges the same 6 points more and liquidates a full point more, and it nets more. At a 25% fee, an agency has to liquidate 11.88% to match A (11% × 0.81 ÷ 0.75).
In illustrative math, 6 points of contingency fee are worth about 0.88 points of liquidation, so an agency 6 points cheaper that liquidates 1 point less costs you money. That exchange rate shifts with your own liquidation and fee levels, which is why the worksheet asks for them.
Results vary by portfolio, including account age, balance and type, and by client program.
Measure every agency the same way: the same placement months, a similar mix of accounts, the same time window and gross collections before fees. Splitting similar accounts between agencies at random gives the fairest read.
Federal law lets the IRS keep up to 25% of amounts collected under private collection contracts to pay for the contractors' services, and up to another 25% for a special compliance personnel account (26 U.S.C. 6306(e)).
Where the rule stands
The Treasury Inspector General for Tax Administration (TIGTA) reported in December 2024 that from April 2017 to March 2024, private agencies collected more than $2.4 billion, or 3.8% of the more than $64.9 billion assigned to them. Commissions paid to the agencies came to more than $406.4 million, about 17% of collections (TSI calculation from TIGTA's figures).
After about $789.4 million in program costs, including those commissions, TIGTA put the program's net revenue at about $1.66 billion. That's roughly 2.6 cents of net-back per dollar assigned (TSI calculation).
The accounts were inactive federal tax receivables, so treat these figures as a public reference point for aged debt.
2 contracts with the same rate can net different amounts. Ask each agency, in writing:
Your own oversight costs count as well: staff time for reconciliation, audits, disputes and complaints. Put an estimate on the worksheet's other-costs line. If you're running a formal search, these questions belong in your collection services RFP.
Weighing a sale of charged-off accounts instead? See whether to sell charged-off accounts or keep placing them.
Whether a collection fee can be passed on to the account holder depends on the agreement that created the debt and on the law that applies, and state laws differ. For consumer debts, the FDCPA bars a debt collector from collecting any amount, including a fee, unless the agreement creating the debt expressly authorizes it or the law permits it (15 U.S.C. 1692f(1)). What an agency charges you is a separate question from what the account holder can be asked to pay.
Each figure comes from the publisher named beside it and was checked against its source on Sep 28, 2026. Vendor figures are labeled vendor-quoted because they come from agencies' own websites. TSI's prices and client data don't appear on this page. Every figure gets checked again by Mar 28, 2027.
TSI (Transworld Systems Inc.) publishes it. TSI provides Accounts Receivable Management (ARM), Healthcare Revenue Cycle Management (RCM), CXBPO and Loan Servicing (via UAS). DebtNext, a TSI company, makes recovery management software for creditors. Some options this page describes compete with services TSI sells. Each figure names its publisher and date so you can check it yourself.
The net-back calculator compares up to 4 agencies side by side from your placements, liquidation, fees and other costs. Open the agency net-back calculator. It runs in your browser, and nothing you enter is stored or sent.
General information, current as of Nov 2, 2026. It isn't legal advice. Rules change and differ by state, so check the sources linked here and talk to your own counsel before you act on it.
The Recovery Performance Diagnostic takes one portfolio, stage or segment and covers baseline economics, channel strategy, complaint and risk analysis, and carve-out design, and it converts to a measured pilot.
