When an invoice goes unpaid and your own reminders fall flat, the next question is usually whether to bring in a debt recovery agency. For a New Zealand trade business, knowing what these agencies actually do, how they charge, and when they're worth it saves you both money and frustration. This guide breaks it all down in plain terms, plus a softer alternative many tradies reach for first.

What a debt recovery agency does

A debt recovery agency is a business you hire to chase money owed to you. Once you hand over the debt, the agency's debt recovery agent contacts the debtor on your behalf — by phone, email, and formal letter — to negotiate payment. They bring persistence, proven scripts, and the psychological weight of a third party, which often shakes loose money a tradie chasing alone can't.

Reputable debt recovery agencies in New Zealand operate within the law. Under the Fair Trading Act 1986, they must not mislead or harass debtors, and the Commerce Commission oversees conduct in this space. A good agency knows these limits and works firmly but fairly within them.

What debt recovery services typically include

Most debt recovery services cover a similar core, though the depth varies:

Tracing: locating debtors who've moved or gone quiet.
Contact and negotiation: structured phone and written follow-up to secure payment or a payment plan.
Formal demands: letters of demand that signal escalation.
Pre-legal and legal escalation: preparing the debt for the Disputes Tribunal (claims up to $60,000) or District Court if it can't be resolved.

Not every agency handles the legal end in-house, so ask before you sign.

How much do debt recovery companies charge?

The most common question is how much do debt recovery companies charge — and the answer depends on the fee model. Debt recovery companies generally use one of three structures.

Fee model	How it works	You pay when	Best suited to
Commission (no-win-no-fee)	Agency keeps a % of what it recovers	Only on successful recovery	Older or doubtful debts
Fixed fee	Flat charge per debt or per action	Upfront or per step	Larger debts where commission would be steep
Hybrid	Small upfront fee plus lower commission	Partly upfront, rest on recovery	Mixed or high-volume ledgers

Commission rates commonly sit somewhere around 10–25%, rising for smaller or harder debts. No-win-no-fee is attractive because your downside is limited, but the percentage is usually higher to compensate. Always confirm whether GST and any legal disbursements sit on top of the quoted rate.

What to look for in a debt recovery agent

Not all debt recovery agencies are equal. Before you engage one, check:

Compliance: do they clearly operate within the Fair Trading Act and Commerce Commission guidance?
Fee transparency: is the commission or fixed fee spelled out, including GST and disbursements?
Reputation: reviews, references, and how long they've operated.
Approach: firm but professional — heavy-handed tactics can damage a client relationship you'd rather keep.
Reporting: will you get updates, or does the debt vanish into a black box?

The right debt recovery agent recovers your money without burning a customer you might work with again.

The softer alternative: professional follow-up first

Here's what many owners miss: handing a debt to an agency is a one-way door. It can sour the relationship, and the commission eats into what you recover. Often the invoice isn't being refused — it's just been forgotten or deprioritised, and a friendly, persistent phone call sorts it.

That's the gap TradeFlow fills before things get adversarial. Our New Zealand-based callers chase your overdue invoices by phone, professionally and on your behalf, recovering most accounts within 14 days while keeping the client relationship intact. It's a gentler, cheaper first move than a debt recovery agency — and you only escalate the stubborn ones. If you'd rather try friendly follow-up first, have a chat with us.

For the full picture of escalating a debt, see our guide on how to collect unpaid invoices in NZ, and if you want to compare the broader market, our rundown of the best debt collection agency in NZ helps you weigh options. It also pays to understand your legal rights chasing unpaid invoices.

When to use a debt recovery agency

Bring in an agency when: the debtor is clearly refusing to pay, the debt is old, you've exhausted reminders and calls, or the amount is large enough to justify the commission. For smaller or recent debts, your own follow-up — or a calling service — usually delivers a better net result. Remember the Limitation Act 2010 generally gives you six years to pursue a debt, but the longer you wait, the harder it gets.

Frequently asked questions

How much do debt recovery companies charge in NZ?

Debt recovery companies typically charge a commission of around 10–25% of what they recover, a fixed fee per debt, or a hybrid of both. No-win-no-fee commission tends to be higher because the agency carries the risk. Confirm whether GST and legal costs are extra.

What does a debt recovery agent actually do?

A debt recovery agent contacts your debtor by phone, email, and formal letter to negotiate payment on your behalf. They may also trace missing debtors and prepare the debt for the Disputes Tribunal or District Court if needed.

Are debt recovery services worth it for small invoices?

For small invoices, agency commission can swallow much of what you recover, so professional phone follow-up is often the smarter first step. Reserve debt recovery services for larger or genuinely refused debts.

Do debt recovery agencies have to follow rules?

Yes. Debt recovery agencies in New Zealand must comply with the Fair Trading Act 1986 — no misleading or harassing conduct — and the Commerce Commission oversees the sector.

Sources

Update log

16 June 2026 — Published. Figures fact-checked against New Zealand government sources, including the Disputes Tribunal’s $60,000 jurisdiction limit (effective 24 January 2026, Ministry of Justice) and the six-year limitation period under the Limitation Act 2010. See Sources above.

Last reviewed: 16 June 2026.