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Collection Department

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Definition of Collection Department

Collection Department Image 1

Collection Department

An internal department within a company staffed by specialists in collecting past due accounts or accounts receivable.



Related Terms:

administrative department

an organizational unit that performs management activities benefiting the entire organization;
includes top management personnel and organization
headquarters


Average Collection Period

Average number of days necessary to receive cash for the sale of
a company's products. It is calculated by dividing the value of the
accounts receivable by the average daily sales for the period.


Average collection period, or days' receivables

The ratio of accounts receivables to sales, or the total
amount of credit extended per dollar of daily sales (average AR/sales * 365).


Bank collection float

The time that elapses between when a check is deposited into a bank account and when the funds are available to the depositor, during which period the bank is collecting payment from the payer's bank.


Collection float

The negative float that is created between the time when you deposit a check in your account
and the time when funds are made available.



Collection fractions

The percentage of a given month's sales collected during the month of sale and each
month following the month of sale.


Collection policy

Procedures followed by a firm in attempting to collect accounts receivables.


Collection Department Image 2

collection policy

Procedures to collect and monitor receivables.


Departmental stocks

The informal and frequently unauthorized retention of excess inventory on the shop floor, which is used as buffer safety stock.


Risk of Collection

Chance that a borrower or trade debtor will not repay an obligation as promised.


service department

an organizational unit that provides one or more specific functional tasks for other internal units



 

 

 

 

 

 

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