It’s a busy Monday morning and as Michael sips his black coffee, he reads through the news updates and goes through his calendar for the week. Meanwhile he gets a notification that says do-not-reply. What he does not know is that the email is for an outstanding invoice that he was supposed to settle two weeks ago. But he ignores the email and continues with his busy schedule.
This is not just the story of Michael but tens and thousands of customers who receive email reminders that do not work. If you’ve been sending out emails from a generic email ID, chances are that your payments aren’t coming in and you’re seeing a spike in your DSO.
Why are payment reminder emails important?
Unpaid invoices post due date often need that extra push to get closed. Many times customers do not pay on time and these arrears end up increasing your DSO. This also means your sales vs collections ratio is affected.
Late payments can result in:
- Realizable cash stuck with your customers
- Increased bad debts
- Your AR being bottlenecked
Having personalized reminder emails that evokes a response from your customer and makes them pay is a part of having an efficient collections process. Almost every business today uses a dunning mechanism to send out reminder emails to their customers. But the open rate as compared to the email delivery rate is as low as only 18%. A dunning solution or an ERP system to send out reminders is just not enough for today’s customers.
Assess what would grab your customer's attention during a hectic workday. How should your email be written in the ideal case to encourage them to go the extra mile and read your reminder email? How can you format your email to force your clients to make long-overdue payments?
Well, a collection agent might not have time to think of all these. With an endless list of customers to follow up with, writing a sweet note at the end of the email is the least of their priority.
The problem today - just dunning is not enough
Emails today are not personalized. 90% of businesses use either a dunning mechanism or follow up with their customers manually. They use either a billing software or rely on their ERP systems for dunning emails.
Problems with dunning mechanism
Emails often get ignored - Reminder emails are sent out by an ERP system using a generic email ID. The subject line doesn't seem compelling enough for a customer to open and read it because they use a standard template. Like Michael in our story, every other customer ignores the email with a notion that it’s an automated email.
Emails don’t get delivered to the inbox - It is not possible to send emails from a personal ID using billing software. Instead, it uses a single email address to send reminders to everyone in its list. Since the ID looks more like a bot's, it is common for them to land in the spam or promotions folders. As a result, a large number of customers never even see the email and are thus unaware of the reminders for payments.
Customers can't reply to you in writing - Another significant issue with using a dunning mechanism is that customers cannot reply to emails using their common ID. The auto-generated emails frequently have a do-not-reply feature, making them only suitable for one-way communication.
Consider a customer who wants to write to you to raise a dispute or to settle an ongoing dispute about billing or returns. Customers cannot do that today when they receive dunning emails. The only way to accomplish this is to find the business' email address on the website and send an email to them. As a result, the customer experience is compromised.
Problems with manual follow-ups
Writing every email from the scratch - Tens of thousands of invoices are added as you scale. After a certain point, sending this many emails becomes physically impossible. The inability to provide wider coverage is another issue. This indicates that there is an equal chance that important invoices will be overlooked or not given priority.
Problems with manually collecting and adding data - When a collection agent drafts an email, he also has to collate data for various parameters like the total invoice amount, total outstanding, due date, personal details of the customer, and so on. When they follow up manually, collection agents source this information from across multiple spreadsheets and the master tracker they maintain. Scrolling through endless rows and columns to find this data for every customer becomes a draining task.
Customer responses are not captured - Disputed invoices account for a major portion of outstanding invoices. They pose a risk of a spike in DSO, bad debts write offs and are extremely time consuming in resolving. When a company manually follows up with invoices, they cannot capture customer responses. Therefore, there is no central location for gathering or tracking such responses when a customer writes about a dispute that needs to be resolved. As a result, payments are delayed because the invoices sit idle for a while.
You need a collections bot
To maximize your revenue through collections, you need more than just a dunning mechanism— a collections bot. Many processes that a collection agent spends time on can be automated by a bot.
Effective follow-ups are not easy to close deals with, but with the right tool, they can be. Here's how Growfin can assist you in cutting through the clutter and finding the most effective means of getting your clients to pay past-due invoices..
Choose which email ID to send from - To choose the email IDs you want to use to send emails, Growfin integrates with your Outlook and Gmail accounts. For instance, you can use an agent's ID to send out reminder emails. However, if it is an escalated invoice, the same email ID can be changed to that of an AR manager. Customers are more likely to open and read emails sent from personal email addresses.
Customize and automate your reminders and responses - With Growfin, it's just a few clicks to automate curated emails. Unlike the restrictions in an ERP system, Growfin lets you embed statements or PDFs. You can also use Placeholders to quickly drag and drop elements like total invoice amount, invoice due, due date, customer information, etc in your mail.
Capture customer responses - In the AR process of today, a response channel is extremely uncommon. One of the biggest issues with customer experience is not understanding what the customer wants to convey. Growfin has a dedicated Inbox to record customer feedback to change the invoice status appropriately with little manual labor required. The inbox also has a shared context that enables various stakeholders to have real-time visibility into an account-level status of each invoice.
Set up sequences to react to emails - Say a customer has raised a dispute. Up until the point at which you manually remove the ID from the list, your standard dunning system will continue to send emails. You can update your invoice status and create a unique follow-up sequence using Growfin. You can choose the days and the frequency of the reminders, as well as which email to send for each different invoice status.
If you think writing effective emails is not a priority for collection agents, then think again. Your email is a notification to your customers that will bring your cash in. A well-crafted email can get your customers to pay on time and have a wider coverage and reach every single overdue customer. Growfin can help you do this efficiently even as you scale.
To know more about how Growfin works, sign up for a free demo here.