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Cash collection is the process of collecting cash payment to fulfill the debts of customers' overdue invoices. Debts currently being processed for cash collection are said to be in collections. [1]
Invoices are always issued with terms of payment. [2] These terms vary widely from 'Cash terms', meaning that the invoice is due immediately[ citation needed], to many forms of ' Credit terms' (for example 30 days from date of invoice [3]).
Unpaid invoices are considered outstanding, and those 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.