Potential 1st time collections regarding unpaid bill - How much does it affect Credit?

Hello all- first timer here, hoping to get some insight!

A little backstory to start. I recently changed my carrier for an auto-policy. I was with them for many years and by stroke of luck and conversation, found out that I qualified for an alternative carrier for a much cheaper policy.

My monthly bill with original carrier was always charged/deducted every 26th monthly and was setup via auto pay. Approaching my next month's payment, I elected to cancel on the 24th knowing I would be switching carriers the next day and having no need to be charged for this carriers next monthly cycle in two days.

Several weeks later I received a notice of an "unpaid balance" with an explanation that if not settled it would be forwarded to an outside collection agency. I spent several phone calls with a number of different employees trying to gain a level of clarity where I felt comfortable with their request being warranted...I never reached that level.

My Credit is borderline excellent, always paid on time, very low usage, etc...

I'm genuinely curious as to what possible affect this could have on the score. I'm a little disappointed at the moment with some of original carriers practices and frankly feel like I would rather pay a collection agency than them.

Thank you.