They chase the debts you pass on to them and then the collector gets a percentage of the amount they get back as a commission/fee, or they have a set fee for each debt (check with the collector). At least, that's how it works for our business. They will potentially settle the debt with your debtor for less than the full amount too, so take that into consideration when figuring out what you'll end up with.
It can be both. The latter is called factoring - they will "purchase" the accounts receivable from you for a price based on the riskiness of your debtors, and then chase it up themselves and keep what they get.
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