All 23 Collections & Bad Debts questions
More in Collections & Bad Debts
What is dunning? What is bad debt? What is a promise to pay and how is it tracked? What is a collection call and how should it be conducted? What is a statement of account and how does it aid collections? What is the difference between the direct write-off method and the allowance method? What is the allowance for doubtful accounts and how is it recorded? How do you record the recovery of a previously written-off account? What is the percentage-of-sales method for estimating bad debt? What is credit insurance and how does it protect receivables?
Advertisement
Back to results for “Credit Control”
Accounts Payable & Receivable › Collections & Bad Debts

What is the collections process in accounts receivable?

Beginner

Answer

Collections is the structured effort to recover overdue customer payments: reminders before and after due dates, calls and emails, statements, escalation to final demands, and, if needed, holds, collection agencies, or legal action. A defined dunning cadence keeps DSO down and reduces the amount that becomes bad debt.
Real-world example Overdue accounts move through a set cadence—reminder at day 3, call at day 15, final demand at day 45—until paid or escalated.

Common follow-ups: What is a dunning cadence? | When does an account get escalated?

Aging Analysis Credit Control Collections & Bad Debts
All 23 Collections & Bad Debts questions