Collections is the process by which a company gets paid for its product/service offerings. The collection process begins once the company issues an invoice to its customers or requests payment towards its product/services. It is completed when a customer actually pays the company for the invoice raised.
For instance, Vareto invoices a customer for its $100K annual contract. The customer pays the invoice in full two weeks later by wire transfer. Therefore, Vareto's collections will be = $100,000.