What is dunning and how does it improve the billing process?

In Europe, only 40% of businesses receive payments on time. In addition to this dismal statistic, one out of four bankruptcies is the result of late payments. Late payments are particularly dangerous to the overall well-being of small and medium-sized businesses.

 

Who is responsible?

Are consumers the only ones to blame for late payments? Not entirely. Humans are not perfect, and especially in today’s fast-paced and complex world, forgetfulness is a very legitimate reason for missing a payment. Moreover, looking deeper into the issue, it also becomes clear that a large number of companies’ efforts to collect payments on time are either minimal or non-existent. The best way to prevent and/or minimize late payments is to have a proactive dunning strategy in place.

 

What is dunning?

Dunning is the process by which businesses communicate with, ask, or remind their customers about an outstanding bill that still needs to be paid. In other words, dunning defines any company’s efforts to collect the accounts receivable. This process is a strategic component of a company’s operations and can be traced back centuries, demonstrating that the problem of late payments has existed for hundreds of years. 

Dunning is a strategic component for a reason, consumers may not pay at all if dunning is not present. Payments that are late or non-existent pose a serious threat to any company’s financial health, liquidity, and overall longevity. Without payment received in exchange for a good or service, it becomes difficult for businesses to maintain their daily operations, let alone invest in further development and growth. 

 

Dunning methods

There are numerous methods for businesses to remind customers of an unpaid bill, but some are more effective than others. Typically, the method chosen is determined by size, date, and customer preferences. For example, if a late payment is extremely valuable and has been outstanding for some time, the company may opt for a more direct mode of communication, such as a phone call. Some companies have the necessary resources and motivation to carry out this process on their own, but it is also common for businesses to outsource it to other companies that specialize in this field. Furthermore, some businesses choose to use debt collection agencies to collect late payments; however, consumers dislike having to communicate with them.

Although dunning is commonly carried out by businesses with a large number of customers, such as utility providers.  any business that wants to ensure a smooth cash flow and remuneration for their goods or services can reap the benefits of dunning. However, thes process must be researched, optimized, and applied to a specific target audience in order to maximize effectiveness and cost-efficiency, and that is why the right knowledge and resources are needed.

 

Dunning benefits

An optimized and targeted dunning process can yield numerous advantages. The main benefit is, of course, the increased likelihood of receiving payments and stabilized cash flows, which is essential for the financial health of the company. But there are multiple others, for example, the dunning process reduces unintentional churn, which means that your customers will not be terminated without notice. It also boosts customer satisfaction by improving the overall experience, which has a positive impact on customer retention. In general, customers receive a more friendly approach and are provided with the opportunities to fix their open invoices and not end up with bad debt. Finally, it improves the overall quality of communication between you and your customers.

 

Collectmaxx payment reminder solution

Dunning is hard, and most businesses don’t have access to the expertise and resources necessary for the development of an effective dunning process. As a result, they are unable to maximize their revenue and lose out on profits.  

The Collectmaxx payment reminders solution has been specifically designed for businesses who are looking to automate the work that goes into a proper dunning process. Collectmaxx results in much faster payments, lower costs, and automation. 

 

Collectmaxx communication channels

Businesses that use Collectmaxx can select from a variety of communication channels including voice calls, emails, SMS, interactive videos, QR codes, pay links, payments in instalments, and our most recent innovation, a digital assistant for call centre automation. 

Recommended reading: The Benefits of Automating Your Call Centre

Using Collectmaxx payment reminders can be sent automatically based on predefined rules, and your call centre can be automated with our digital assistant, which can confidently answer your customers’ most common questions, in this way leaving the call centre employees for complicated cases. In fact, companies are already exploiting our Digital Assistant, which according to reports, results in reduced sizes of call centres, thus, significantly smaller costs. 

 

About Alphacomm

We are experts in dunning and can turn this complicated process into an enjoyable and beneficial feature of your business. You can view a Video about our Digital Assistant and read more about our Payment Reminder Solution to decide whether it is something your business would benefit from.

 

Contact

Did we pique your interest? We are always happy to discuss possible ways to improve your profits and bring your company’s dunning process to another level. Do not hesitate to contact us. Our profit booster will get back to you as soon as possible.

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