The B2B AR & Debt Collection Glossary

The average number of days it takes your business to collect payment after a sale. Lower DSO means faster cash flow. Industry benchmark: under 45 days.

Money owed to your business for goods or services already delivered but not yet paid. Appears as a current asset on the balance sheet.

Receivables that are unlikely to be collected and must be written off as a loss. Can be deducted as a business expense when officially recognized.

The process of systematically contacting customers to collect overdue payments — via email, phone, or letter. Effective dunning sequences recover 60–80% of late invoices.

The accounting action of removing an uncollectable debt from the balance sheet as a loss. Charging off a debt does not mean you stop collecting — it's an accounting entry only.

A categorized list of all outstanding receivables grouped by how long they have been unpaid (0–30 days, 31–60, 61–90, 90+). Essential for prioritizing collection efforts.

Standard B2B payment terms indicating the number of days a buyer has to pay after the invoice date. Net 30 is the most common; Net 90 increases working capital strain significantly.

A fee model where the collection agency earns a percentage of what they recover — typically 20–35% for B2B. You pay nothing if nothing is collected. AgentCollect charges 10%.

When your own company collects its overdue invoices directly, under your brand name. Maintains the customer relationship but requires internal resources and expertise.

Outsourcing collection of overdue invoices to a licensed collection agency. The agency contacts debtors on their own behalf. Regulated under the FDCPA (for consumer debt) and state laws.

The process of locating a debtor who has moved or changed contact information without notice. Uses public records, databases, and AI enrichment tools to find updated addresses and phone numbers.

A licensed attorney who pursues unpaid debts through legal channels — demand letters, lawsuits, and judgments. Used for large B2B debts ($10K+) when standard collection has failed.

The accounting act of reducing the value of a receivable to zero when it's deemed uncollectible. Different from a charge-off in timing and treatment.

The percentage of outstanding receivables collected in a given period. Formula: (Total Collected / Total AR) × 100. A key KPI for AR teams.

An accounting provision estimating the portion of accounts receivable unlikely to be collected. Also called allowance for doubtful accounts.

A legal claim filed under the Uniform Commercial Code that secures a creditor's interest in a debtor's assets. Common in B2B secured transactions.

A formal request from a debtor to stop all collection communications. In B2B, the rules differ from consumer debt — creditors retain more options.

Measures how efficiently a company collects receivables. Formula: Net Credit Sales / Average AR. Higher is better. Related to DSO (365 / AR Turnover).

A structured agreement where a debtor pays the owed amount in scheduled installments. Increases recovery rates by reducing the psychological barrier to paying a large sum at once.

A formal notice from a creditor or attorney requesting payment of a debt. Attorney-sent demand letters have 40-60% success rates vs 15-25% for creditor-sent letters.

A person or business that owes money to another party (the creditor) for goods or services received. In B2B, typically a company with an outstanding invoice.

A person or business that is owed money by a debtor for goods or services provided. The party initiating collection when payment is overdue.

An invoice that has not been paid by its due date. The longer an invoice remains past due, the lower the probability of collection.

The systematic process of pursuing payment on overdue accounts, from initial reminders through escalation to legal action or write-off.

Money a company owes TO its vendors and suppliers. The mirror of accounts receivable. Understanding AP helps collectors navigate debtor organizations.

The percentage of placed debt actually recovered after deducting all collection costs and fees. The true measure of collection ROI.

The process of resolving disagreements between creditor and debtor about an invoice's validity, amount, or terms. Must be separated from collection to maximize recovery.