Collection Agency vs. Small Claims

As with any comparison of two things, there are always the pros and cons. Below is an outlay of the comparison of using a collection agency versus taking your debtor to small claims court. We have tried to remain as objective as possible. 

First, lets define what collection agencies and small claims are.

Collection agencies are organizations that specializes in debt collection. Most collection agencies operate as agents of creditors and collect debts for a fee or percentage of the total amount owed.

Small Claims, and in turn small claims court where they are heard, is special court, sometimes called conciliation court, that provides expeditious, informal, and inexpensive adjudication of small claims. Every state has established a small claims or conciliation court to resolve legal disputes involving an amount of money that is less than a set dollar amount. You can find a list of the maximum amount that each state will hear for small claims court (

There are pros and cons to each side of the equation and many of the pros and cons reflect the cons and pros of the opposite side. 

Those who consider themselves, “control-freaks”, may prefer to take matters to small claims court on their own. They do so with risk. They risk losing productive hours that could better be spent building their business, and of course they risk losing the debt all together. There is never any guarantees in court. 

The real question to be asked: Is your time worth more than what you would pay in a collection agency’s contingency fees?

If the answer is yes, and in almost every circumstance it certainly is, use a collection agency. They will allow you to stay on top of your business, avoid losing productive hours, and most importantly, likely

On the other hand if you are not one who easily delegate tasks, and your debt qualifies for small claims, it may be worth your while to take your debt to small claims court. 


We have outlined in list form below:

Collection Agency


  • Time of recovery is often much faster than small claims (CannaBIZ Collects averages 14 days for payment or settlement agreement)
  • Avoid court preparation and time  
  • Reduced time, effort, and preparation on creditors end:
    • As a result: 
      • You do not have to lose productive time preparing for the trial
      • You do not have to lose a day spending it in small claims court
      • You do not have to prepare a long list of evidence to present during your case
  • You are not guaranteed to pay court fees
  • Most collection agencies bill on a contingency. You ONLY pay if money is collected.
    • CannaBIZ Collects is a contingent only agency with extremely competitive rates


  • Depending on contingency rates and size of the claim, a collection agency may be more expensive than pursuing small claims.
  • Collection efforts are no longer in your hands. Need to instill trust in your collection partner to represent your business. 

Small Claims Court:


  • Can save money because there is no contingency percentage to pay, if successful. 
  • Remain in control of collection efforts


  • Must go to court
  • No guarantee of a win in court
  • Process is slow and can take months to get on the court docket
  • Must pay for court fees
  • Must prepare case on your own
  • Lose productive time away from your business

Collection Agency


Small Claims Court

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Cody Ziering