Late payments in Costa Rica continue to show a sustained deterioration. In just two years, companies have experienced a significant increase in delinquent accounts across most sectors of the economy. The figures confirm this trend: delinquency in Costa Rican colones increased from 10.5% to 12.6%, while delinquency in U.S. dollars remains at 11.8%, according to data from the Central Bank of Costa Rica (BCCR) and the General Superintendency of Financial Institutions (SUGEF).
For companies that extend credit, this means compromised cash flow, strained business relationships, and revenue that is delayed or may never be collected. More than 87% of Costa Ricans have some form of active debt, while even borrowers with stronger financial profiles allocate nearly one-third of their income to debt repayment. This level of credit exposure reduces debtors’ financial flexibility and increases the risk of default.
What does this mean for your company? If you do not act promptly, accounts receivable may eventually become uncollectible. And when it comes to debt recovery, time is not on your side.
The Critical Point: Why Delaying Collection Reduces Recovery
There is a decisive stage in the debt collection cycle. When an obligation remains overdue for more than 60 to 90 days without a formal payment agreement, the likelihood of recovery falls below 20%.
When should your company take action?
Operational evidence is clear: intervene between 45 and 60 days after the payment becomes overdue. At this stage, your company should activate direct negotiation protocols or structure formal payment arrangements.
The objective is to prevent the debt from exceeding the 90-day threshold, after which recovery becomes statistically unlikely.
Once this threshold has been crossed, the value of the debt begins to erode rapidly due to operating expenses, legal costs, and loss of value caused by inflation—estimated at approximately 9% over three years of litigation.
Every month that collection efforts are postponed reduces the real value of your receivable.
Two Options: Out-of-Court or Judicial Collection?
When a client fails to pay, your company generally has two alternatives. One is faster and more flexible and can help preserve the commercial relationship. The other is slower, more expensive, and will often permanently affect the relationship with the debtor.
Out-of-court collection: an efficient option for early-stage delinquency
Out-of-court debt collection includes all actions aimed at bringing an overdue account back into good standing without requiring intervention by the courts.
This approach typically involves:
- Multichannel collection efforts through telephone calls, messaging, email, and location visits.
- Negotiation and structuring of payment arrangements, potentially supported by additional guarantees.
- Predictable costs, with success-based fees generally ranging from 5% to 15% of the amount recovered.
Negotiation cycles are relatively short, generally lasting between 15 and 60 days, with recovery rates ranging from 60% to 85% when action is taken before the account reaches 60 days past due.
This approach is effective because it addresses the debt before it becomes uncollectible, preserves opportunities for renegotiation, and avoids the costs and delays associated with court proceedings.
Judicial collection: a last-resort option
Judicial debt collection is the formal legal process conducted before Costa Rica’s Specialized Collection Courts.
The challenge is that Costa Rican courts face structural case overload. Approximately six out of every ten cases involve consumer or commercial debt collection.
As a result, a judicial collection proceeding may take between 24 and 48 months. Court fees, legal fees, expert assessments, and notification expenses may add an additional 15% to 20% to the value of the debt.
Should your company immediately pursue judicial collection?
Generally, judicial proceedings should be considered when there is solid supporting documentation, the debtor has assets that may be subject to attachment, and out-of-court collection efforts have failed to produce an agreement within a reasonable period.
For early-stage delinquency, the evidence is clear: out-of-court collection is generally faster, more cost-effective, and more efficient.
Best Practices to Prevent and Manage Late Payments
As credit risk increases, companies should move from a reactive approach to a preventive debt management strategy.
Assess the client before extending credit
Do not rely solely on traditional references. Analyze the client’s cash flow, payment capacity, and overall debt exposure.
Integration with credit bureaus can help monitor a debtor’s leverage and prevent companies from extending credit beyond a client’s actual repayment capacity.
Properly document every transaction
One recurring problem is inadequate documentation of the debt. To protect your company’s ability to pursue collection if necessary, make sure each transaction generates valid documentation that can support enforcement.
This may include:
- Promissory notes and bills of exchange that comply with applicable legal formalities, including provisions regarding domicile and default interest within the limits established by the BCCR.
- Electronic invoices with evidence of proper receipt and identification of the authorized recipient.
- Agreements secured by movable collateral and duly registered with the Movable Collateral Registry.
Monitor early warning signs
Do not wait until an account is already significantly overdue.
Implement preventive alerts based on key indicators. If your average collection period exceeds the contractual payment term by 15%, activate your collection protocols immediately.
ERP Collections: An Integrated Solution for Debt Recovery
In the Costa Rican market, ERP Collections—developed by ERP Lawyers—is a hybrid Legal-Tech model designed to integrate preventive, out-of-court, and judicial debt collection into a single process.
The platform combines technology with specialized legal advice through a five-step workflow:
- Registration and authentication: creation of the company’s corporate profile.
- Digital document upload: submission of invoices, agreements, promissory notes, and other documents supporting the receivable.
- Feasibility assessment: evaluation of the technical and financial viability of recovering the debt.
- Assignment of a specialized attorney: once the quotation is accepted, the matter is assigned to an attorney experienced in debt collection.
- Real-time monitoring: access through mobile applications for iOS and Android, as well as the web platform, with Excel/PDF exports and push notifications.
Why choose ERP Collections?
ERP Collections provides complete visibility into the status of your portfolio, reducing the uncertainty commonly associated with judicial proceedings.
The preliminary feasibility assessment helps prevent unnecessary litigation expenses against insolvent debtors, protecting your company’s cash flow.
Complete traceability allows you to know exactly what stage each account has reached, 24/7. Your company can also adjust its credit policies with direct legal guidance.
ERP Collections is more than software. It is an integrated service combining Legal-Tech solutions with a legal team specializing in judicial and out-of-court debt collection, backed by more than 14 years of experience in digitizing a process that has traditionally lacked transparency and traceability for businesses.
Start Your Out-of-Court Debt Recovery Process Today
If you would like to assess how your receivables portfolio is structured and identify the risks your company may be facing, we invite you to begin your out-of-court debt recovery process with a complimentary feasibility assessment conducted by our specialized team.
At ERP Collections, we combine Legal-Tech solutions with direct legal advice to analyze your portfolio and cash flow, review the alignment between your credit documentation and collection policies, and develop a clear strategy to recover outstanding debts while avoiding unnecessary court proceedings and optimizing liquidity.
Do not allow your receivables portfolio to deteriorate. Acting promptly helps protect your cash flow and supports the long-term sustainability of your business.
Access now the ERP Collections platform and learn more about how ERP Lawyers combines technology and legal expertise to improve debt recovery.
