Accounts Receivable & Collections Glossary

Plain-English definitions of the AR, collections, and order-to-cash terms that show up in every finance conversation.

Days sales outstanding (DSO)

The average number of days to collect payment after a sale — the key collections metric.

The average number of days a company takes to pay its suppliers.

How many times a business collects its average receivables over a period.

The share of available receivables actually collected in a period.

The structured, escalating follow-up process for collecting overdue invoices.

Matching incoming payments to the correct open invoices and recording them.

Researching, validating, and resolving short-pays and chargebacks customers take.

A customer’s commitment to pay an overdue invoice by a specific date.

Money customers owe for goods or services delivered but not yet paid for.

The end-to-end process from a customer order to collected, recorded payment.

A report grouping unpaid invoices by how long they’ve been outstanding.

A document that reduces the amount a customer owes on a previously issued invoice.

Money owed that a business no longer expects to collect and writes off as a loss.