Accounting technology / Glossary / Collections management

What is collections management?

Definition

Collections management is the accounts receivable work of getting overdue invoices paid: tracking what each customer owes and how late it is, sending reminders, calling, handling disputes and promises to pay, and escalating accounts that stay unpaid. Its aim is to bring cash in sooner without damaging customer relationships, and its main measure is days sales outstanding.

Also calledcollectionsreceivables collections

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Works from: Aged receivables
Main measure: Days sales outstanding
Category: AP, AR and payments

How collections management works

Teams start from the aged receivables list and decide who to chase first, usually by amount overdue, how late it is and the customer's payment history. Early stages are automated reminders, often before the due date as well as after it; later stages are personal emails and calls, holds on further orders, and finally a debt collection agency or legal action. Disputes, such as a wrong price or a missing purchase order number, go to whoever can fix them, since an invoice in dispute will not be paid however often it is chased. Collections software adds prioritised worklists, reminder sequences, customer payment portals and a record of every contact. Stuut, Kolleno, Monk, Fazeshift and Paraglide AI use AI agents or scoring to run parts of this work.

Common questions

What is the difference between collections and credit control?+

Collections is chasing payment on invoices already issued. Credit control is the wider term, common in the UK and Commonwealth, that also covers deciding which customers get credit and how much, before any invoice exists.

When should collections start?+

Before the invoice is due: a reminder a few days before the due date prevents many late payments. After the due date, a set sequence of reminders and calls follows, with escalation points agreed in advance.

What is a promise to pay?+

A customer's commitment to pay a stated amount on a stated date, recorded in the collections system. Collectors follow up only if the date passes, which saves chasing customers who have already agreed to pay.