A little information goes a long way. It is sometimes easy to assume that, since we’re collection experts with over 20 years of experience, everyone else must know about collections as well. Of course, that is not the case. For many business owners and account managers, the concept of commercial collection is just as nebulous as it is to the layperson.

That’s why, in the interest of spreading as much information as possible, we thought we would take a post out of this blog to catch you up on a few of the more common collection terms. Savvy readers might have come across one – or many – of these terms before, but if that’s the case allow this to be a refresher.

By no means complete, we nevertheless hope that this glossary of 11 common terms will help shine some light on the wide world of a business to business collection agency – perhaps even changing some unfavourable preconceptions along the way. Here they are, in alphabetical order:

Accounts Payable / Receivable

Accounts payable are a company’s “current liabilities” – essentially, their debts and obligations. It is the outgoing money that a business must pay to its creditors, and the term is often used, at least in commercial collections, to refer to the debtor in a creditor-debtor relationship.

The creditor’s side of the coin is called accounts receivable – that is, the amount owed to a business that has provided goods and services to a debtor. Often, though not always, accounts payable are handled by the (you guessed it) accounts payable department,

Bad Debt

Bad debt is generally defined as a debt that is considered unrecoverable. It might be because the debtor is bankrupt, or just unreachable, but it usually marks the moment when the creditor company cuts its losses. At Summit A*R, we are particularly adept at recovering difficult debts, so if you’re a credit manager or other professional looking to rid yourself of the headache of bad debt, please give us a call. Our expert collectors also understand and can mirror, executive types, making them proficient at recovering delicate and important commercial debts.


When a debtor is unable to pay their debts, they may file for bankruptcy. Often, the process is kicked off by the debtor, and results in their debts being relieved or at least restructured. It can be a pretty difficult concept, steeped in all sorts of legalese, but to learn more about the chapters of bankruptcy, this How Stuff Works article does a fine job of explanation.

Cash Flow

On this blog, as well as countless other money management publications, you will hear the term cash flow thrown around, but there is some misconception about the term. Put in the simplest terms possible, it refers to the money coming into a business vs. the money going out. If you have the regular amount of money going out (as part of your accounts payable) but you are struggling to collect incoming cash, your cash flow takes a hit. Maintaining cash flow is integral to keeping a business functioning smoothly, which is why we believe it’s so important for companies to be in contact with a commercial collection agency association that recovers money without sacrificing client relationships.

Creditor / Debtor

As mentioned above, a creditor is owed money, while a debtor owes money. It is a relationship fundamental to almost all businesses and can be managed effectively with a commercial collection agency, especially with the use of pre-collection services.


In the world of collections, delinquent refers to a debtor who is late to pay. Technically, delinquency starts as soon as the payment is overdue, but different people/professionals/businesses have different ways of classifying the term. Suffice it to say, when you hear the term delinquent in reference to a debtor, it means they are late on payment.

First-Party / Third-Party Collection

Usually, first-party refers to creditors using their own employees to recover a debt, and third-party refers to when an outside collection agency is called in. The great thing about us here at Summit A*R is that we can act on behalf of your company as though we are the first-party collection, taking careful caution to preserve your delicate client relationships.


Yes, the above description promised you a list of common collection terms, but we are slipping this very Summit-specific term in because we believe it is a fundamental tool for understanding how a collection agency should operate. We often tell clients we have a “PHD” in collections – that stands for Preserve Human Dignity. Ethically, and psychologically, it is better to collect with someone’s fundamental dignity in mind. You get better results and an easier conscience.

Recovery Rate

As a percentage of the face value of a debt, the recovery rate is amount recovered. You were owed $100 and you recovered $20? Your recovery rate is 20%. A commercial collection agency is often defined by their recovery rate, and our recovery rate is nearly double the industry average. Expressed another way: we’re very good at our job!


Robo-calls are those annoying, autodialed phone calls loaded with a pre-recorded message. They are used by some sleazy collection agencies to pester debtors into paying up. We don’t use robocalls; not only are they ineffective, but they are also undignified, and can easily strain your business relationship to the debtor.

Skip Tracing

Skip tracing is the process of finding someone who has disappeared. Sometimes, debtors can be difficult to track down, and so the skip tracing process is a key part of collecting and recovering debt. Skip tracing operations can range from the primitive to the sophisticated, depending on the collection agency. At Summit A*R, we count ourselves in the latter camp, employing a licensed private detective to helm our skip tracing department.

That’s our quick glossary of collection terms, to help you better understand the process. If you have any more questions or would like to make use of one of our services, contact us anytime through our website, or by phone.