When a Client in Collections Pays You Directly: What Canadian Businesses Should Do Next
It happens more often than you’d think. You place an overdue account with a collection agency, and then your customer calls you saying, “I’ll pay you directly, not the agency.”
At first glance, that sounds like a win. Money is money, right?
But this moment is exactly where businesses can create problems for themselves: duplicate collection activity, confusing communication, reporting mix-ups, and strained relationships with the agency and the payer. The good news is that with a clear process, you can accept payment the right way, protect your position, and close the file cleanly.
Quick answer
If a customer pays you directly after you’ve placed the account in collections:
confirm funds cleared, 2) notify the agency immediately, 3) align on the payoff and closure steps, 4) document everything, 5) tighten your process so it does not repeat.
Why customers try to pay you directly
In B2B collections, “pay you direct” usually means one of these:
They want to preserve the relationship and feel awkward dealing with a third party.
They think they can negotiate better directly with you.
They are trying to avoid consequences like escalations, reporting, or ongoing follow-ups.
They are buying time and hoping the agency backs off if they engage you.
It is not inherently bad. You just need to handle it deliberately.
Step-by-step process for handling direct payment properly
1) Confirm the payment is real and cleared
Do not treat “we sent it” as resolution. Confirm:
the payment method
the amount received
whether it cleared (especially for cheques and EFT timing)
the invoice(s) it applies to
If it is a cheque, be cautious. Cheques can be reversed. If it is eTransfer or wire, confirm settlement.
2) Pull your collection placement details
Before you respond with any promises, review:
the date you placed the account
what information you sent
any settlement instructions you gave
your internal notes on prior payment promises
If you have a placement agreement or intake confirmation, keep it in front of you.
3) Notify your collection agency the same day
This is the part most companies skip, and it creates the mess.
Tell the agency:
the customer contacted you
what they claimed they paid (amount and method)
the date and time
any proof you have (remittance email, screenshot, receipt)
A quality agency will want to stop or adjust activity quickly to prevent mixed messages and reputational damage. Vanguard positions “transparent reporting” as a core part of its approach, which is exactly what you want in moments like this.
4) Decide how you want future communication handled
Pick one lane:
Lane A: you take over communication until the funds clear, then you instruct the agency to close
Lane B: the agency remains primary point of contact, and you redirect the debtor back to them
Lane C: coordinated approach, where you and the agency align on one message and one deadline
For most B2B cases, Lane C works best. You preserve the relationship, and the agency keeps the file controlled.
5) Handle partial payments carefully
Partial payments are where accounts linger forever.
If the customer wants to pay part now and “the rest later,” decide:
Are you accepting that plan?
Is it in writing?
What happens if they miss the next date?
Does the agency continue work while the plan is active?
If you accept a plan, put it in writing and set clear consequences.
6) Close the loop in writing once paid
When paid in full, ensure you have:
internal confirmation of zero balance
a written instruction to close the file
confirmation from the agency that collection activity has stopped
If any reporting or formal closure steps apply, align on those too. Vanguard notes it reports delinquent accounts to major bureaus like Equifax and TransUnion, so coordination and documentation matter.
7) Prevent the “pay direct” pattern from repeating
If this happens once, it will happen again unless you tighten the process.
A few practical fixes:
Add a line to your final notice: “After X days overdue, accounts may be placed with a third party for recovery.”
When you place an account, clearly state payment instructions: pay via agency or via you, but not both.
Make it easy to pay: offer EFT or eTransfer options for business customers.
Use credit applications and documented terms, including dispute timelines.
What not to do
Do not let two parties chase the same debtor at the same time.
Do not accept vague promises or “we will pay next week” with no date.
Do not close the file before the funds clear.
Do not let your team argue about who is “allowed” to collect. Control the message, keep it calm, keep it consistent.
FAQ
Should we refuse direct payment once a file is in collections?
Not necessarily. You can accept it, but you must coordinate closure properly and document it.
If they pay directly, does the account still count as “collected”?
From a business standpoint you got paid, which is the goal. Operationally, confirm closure steps with the agency to avoid duplication.
What if they paid you but the agency is still contacting them?
Notify the agency immediately with proof, and ask for confirmation activity has stopped.
Should we keep doing business with them after this?
Only if you update terms. Many businesses continue the relationship but tighten credit limits, deposits, or payment terms.