Glossary · Collections
Third-party collections
Third-party collections means an outside agency or law firm pursues a debt in its own name, after the supplier has handed the account over.
In third-party collections the customer is contacted by someone other than the supplier: a collection agency or a lawyer, writing on their own letterhead. The change of sender is itself part of the pressure.
It is used for accounts that first-party efforts haven’t resolved, typically after several reminders, a formal demand and a period of silence or broken promises.
Expect the commercial relationship to end at this point. Before handing over, make sure the debt is undisputed and documented — contract, invoices, delivery evidence, correspondence — because the agency or lawyer will need it.
Example
A €12,000 debt at 120 days goes to a law firm, which sends a demand on its letterhead. The customer, who ignored the supplier’s reminders, pays within two weeks.