Cash collection
Encyclopedia
Cash collection is a function of Accounts receivable
Accounts receivable
Accounts receivable also known as Debtors, is money owed to a business by its clients and shown on its Balance Sheet as an asset...

. It is the recovery of cash from a business or individual with which you have issued an Invoice
Invoice
An invoice or bill is a commercial document issued by a seller to the buyer, indicating the products, quantities, and agreed prices for products or services the seller has provided the buyer. An invoice indicates the buyer must pay the seller, according to the payment terms...

.

Unpaid invoices are considered outstanding.

Invoices are always issued with terms of payment. These terms vary widely from 'Cash
Cash
In common language cash refers to money in the physical form of currency, such as banknotes and coins.In bookkeeping and finance, cash refers to current assets comprising currency or currency equivalents that can be accessed immediately or near-immediately...

 terms', meaning that the invoice is due immediately, to many forms of 'Credit
Credit (finance)
Credit is the trust which allows one party to provide resources to another party where that second party does not reimburse the first party immediately , but instead arranges either to repay or return those resources at a later date. The resources provided may be financial Credit is the trust...

 terms'. (for example 30 days from date of invoice)

Invoices which remain unpaid for periods longer than their 'terms' indicate are considered overdue

It is the aim of the Cash collection function of a business to collect Monies for all outstanding invoices before they become overdue and to mediate payment arrangements to ensure that invoiced debts do not become doubtful or bad
Bad debt
A bad debt is an amount that is written off by the business as a loss to the business and classified as an expense because the debt owed to the business is unable to be collected, and all reasonable efforts have been exhausted to collect the amount owed...

.
The source of this article is wikipedia, the free encyclopedia.  The text of this article is licensed under the GFDL.
 
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