Collections

Collections is the discipline of converting past-due receivables into cash: contacting customers about overdue invoices, discovering why payment has not arrived, negotiating resolution, and escalating when negotiation fails. In B2B, most delinquency is not refusal to pay; it is missing invoices, unresolved disputes, AP process friction, or short-term cash timing on the customer's side. The collector's first job is diagnosis, and the treatment differs completely by cause.

Effective B2B collections is segmented and sequenced. Segmentation matches effort to risk and value: large balances and high-risk grades get early personal calls, small low-risk balances get automated reminders, strategic accounts get coordinated outreach with the sales owner. Sequencing defines the escalation ladder, reminder before due date, notice at 5 days past due, call at 15, senior contact and hold consideration at 30, final demand and agency referral at 90, so that every account is always at a known stage with a known next action rather than waiting for a collector to remember it.

Collections performance is measured beyond raw DSO: collection effectiveness index (CEI), percentage of AR over 90 days, promise-kept rates, and roll rates by aging bucket. Culturally, the strongest collections operations treat the function as customer-facing finance rather than an enforcement bureau, because the person calling about an invoice is often the seller's most frequent post-sale contact with the customer, and tone at 15 days past due determines cooperation at 60.