Definition of Collections | Collection Process Defined

Accounting Definitions

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Collections Definition

Short Definition
Collections is a term used by a business when referring to money owed to that business by a customer.  When a customer does not pay the business within the terms specified, the amount of the bill becomes past due and is sometimes submitted to a collection agency.

Extended Definition
When a business sells a product or service to a customer, payment is expected either at the time of the transaction or within a defined period of time such as 30 days. Unfortunately, some customers do not pay the business within those set terms and, at this point, the account can be considered in collections.

Related Blog Article:
An Overview of Collections
Collections Problems? Your Invoice May Be to Blame

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