An Overview of Collections

improving collections

Generally, business owners would like to keep a positive cash flow and generate more profits than losses. When a business provides a product or service to a customer, payment is expected at the time of the transaction or within specific terms.

For a variety of reasons, sometimes customers do not pay their bill. Businesses can allow 15, 30, 60 days or more after the original due date in hopes that in time, the customer will pay.  

At some point, the business may decide to send the account to collections, either a person or department within the business or an outside agency. The primary goal is to get the customer to pay the bill for product purchased or services rendered.

To retain customer satisfaction, many companies will do their best to work out a payment plan or other arrangements with the customer who has not paid their bill. Unemployment, injury, illness or some other pressing issue may have distracted the customer, or the bill could have been misplaced. Making an attempt at collections from within the business is the preferred first step of many businesses. Business owners who choose to send unpaid accounts to collections should be sure to get references and select a reputable firm. Business owners should expect to pay a fee, either based on the amount collected or the time spent collecting the funds.

On the flip side, a business may have an outstanding bill for a product or service, and the vendor may refer the business to collections. If the business is unable to make a payment within the terms specified, communication can be key to renegotiating the payment with the vendor. If a business is not paying a vendor due to a dispute, they should have all documentation prepared and available to share with the vendor.

The Federal Trade Commission offers collections information and resources through the Bureau of Consumer Protection Business Center.  This organization provides useful information for business owners and customers.

This article was provided by Patriot Software, Inc., developer of online small business software solutions including online payroll software, time and attendance software, applicant tracking software, human resources software, and an employee portal. Patriot Software also offers a payroll tax filing service for payroll customers. For more information, visit www.PatriotSoftware.com.


We provide fast, simple, and affordable accounting and payroll software. After a rough start-up experience, we know first hand what small businesses need in order to breakthrough and achieve success. So we created a software service to help you keep the two things you don’t have enough of… time and money.

Leave a Reply