Wearing a collar all the time will definately mat a coat, especially when the coat is wet -ie dog gets rained on.
It can also cause discolouration to the coat.
Don't cut the mat out, try to make slices from the base of the mat to the top and then gently pry each section apart. You will lose some of the coat but it won't be nearly as noticeable.
I don't leave any type of collar on our dogs unless it is attached to a lead right before taking them out. Even the vet knows better than to leave one on my dog if the dog is in for a surgery. We nearly lost a Belgian in a freak accident when his martingale ring caught on a cupboard door handle resulting in him throwing himself around to get away from the sudden entrapment. Fortunately the door pulled off and he was okay. My old cat, who wore a collar and a tag all the first 18 years she lived with us, decided to lay on a heat duct one day and her tag went down the slot and turned. Fortunately, the collar broke. I've heard of dogs playing and getting teeth caught on the other dog's collar and I've heard of dogs getting caught on handles of doors in cars. It's a risk that I no longer am willing to take and since all my animals are microchipped I don't need to.