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Business Booster: Three reasons to optimise the dunning process

Within the scope of receivables management, the dunning process plays an important role in the settlement of outstanding receivables – and to avoid collection proceedings in a customer-friendly manner.

Many companies still do not focus on optimising their processes although this can strengthen the customer relationship as well as increase the number of paid invoices. At the same time, companies are gaining more discretion when it comes to using resources. By avoiding investments in necessary internal dunning processes, this allows them to concentrate on their core business. Let’s take a closer look at these three good reasons to optimise the dunning process:

1. You will protect your good customer relationships

A default of payment doesn’t have to negatively affect the customer relationship. This topic is certainly not always simple for many companies, as unreliable payers entail operational expenses along with the outstanding income. The key to success here is to take a dialogue and solution-oriented approach when communicating with the customer. I regularly see our clients not only increase their revenues, but also improve and strengthen the relationship with the end customer, which is then expressed in a stable continued contractual relationship. It is important to focus on the needs of consumers and to give them ways and means to quickly and easily settle their receivables. The means of communication is also crucial. This should always be a channel, which the end customer actually prefers

2. You will increase your earnings

This thing is probably very important to you: clever dunning brings higher earnings. There are three crucial factors which to consider: means of communication, timing and messages. Using different communication channels is primarily about reaching out to the defaulted payer and bringing him or her to action. Every communication channel available should be carefully assessed. Although the matter can certainly be presented in a letter or e-mail, in my experience, you have a better chance of resolving the situation quickly and satisfactorily in person by telephone. The right timing is also important: When exactly does the consumer receive which message? The dunning frequency and intensity will determine whether the process is successful. Here, it is also crucial to closely evaluate every possible measure. The more a measure meets the needs of the consumer, the fewer subsequent measures are required, keeping costs low. It is also important to choose the right form and tone of messages, formulating them as comprehensibly as possible. In composing your message, you need to change perspective and put the following question in focus:  Will your customer understand the meaning behind the message? Many companies, for example, face the challenge that the language used in a qualified reminder is often difficult to understand. At this point, I would like to take a look at market research. Several studies show that consumers decide within two seconds whether they will read a letter more carefully or throw it away. In e-mails, only a glance at the reference line will decide whether it is even opened.

These elements will be decisive for whether an invoice will be paid or not. The more comprehensible the message is, the more likely it will be read. This will then open the door to reach a joint solution with the consumer.

3. You will save time and resources

Dunning processes can easily drain resources. Unpaid or delayed payments of invoices bear an enormous cost, whether this means manpower, time and concentration – at the expense of your core business. Modern dunning processes also require large investments in IT, innovations and basic system management. This is reason enough to subject the dunning process to rigorous scrutiny, and to free up time and resources with a targeted optimisation or external support.

New developments, such as robotic process automation (RPA), can significantly relieve employees and accelerate dunning processes. As such, we at Arvato Financial Solutions use robots that can allocate payments to arrears. For consumers this means that they will get quick and straightforward feedback on the receipt of payment and on next steps. Subscriptions for digital platforms or other services can be activated immediately. For our clients, this also means that important resources are preserved by automated processes.

You can learn more on the topic of dunning process optimisation in our Business Insight: Download now!

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