Vareto Finance Glossary
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.
Why it matters
Revenue collection is a crucial component of any company’s cash flow and impacts its receivables. If a company is issuing invoices to customers and recognizing revenue, but it is not getting paid then it can be trouble. It is also important for a company to monitor its collections so as to understand how quickly or slowly customers are paying once an invoice has been raised.
See Vareto in action
Give your finance team the tools needed to launch your company into the future.