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Dunning guide

What Is a Dunning Notice?

A dunning notice is a communication that is sent out to remind clients that they have invoices that need to be paid. While they tend to be lenient in the initial few, the notices become tend to impose urgency as the invoices remain unpaid for longer periods of time. Modern dunning has developed from physical letters to electronic reminders that are issued in various ways including emails, phone calls, push notifications, and text messages. Emails, push notifications, and text messages assist customers as they can include hyperlinks that lead straight to the payment portal, facilitating the process and encouraging quicker payments.

Why are Dunning Letters are Important?

A business must effectively manage the accounts that have not paid or risk loosing substantial sums of money that likely are required to continue operation. In a perfect system, clients will pay the amounts due immediately upon receiving an invoice; however, this does not happen for multiple reasons. The customer may not have collected what they purchased, their payment options may not be flexible, they may not be able to afford the product or service, they may have received an unclear invoice, or they may have not gotten a invoice at all. The time these obstacles take to overcome between the company and customer is called Days Sales Outstanding (DSO). 

How to Deliver Dunning Notices?

Successful efforts can be taken to get in payments faster and ultimately reduce DSO. Issuing dunning notices are not as difficult as they seem, especially if your company has an automated dunning system. The business must focus on relaying essential information that urges a response. Once a template with core material is created, the company must decide among formats, mediums, stylistic features, functionality, and overall tone. They usually have tone shift as more notices are sent, but these pieces of information should be included in all: amount due, invoice identification number, date of unpaid invoice, and any late fees.

How to Track Effectiveness of Dunning Notices?

Reduced DSO is a clear indication that the dunning notices are prompting customers to pay their overdue invoices. Dunning notices may be working on different clients for different reasons, but the important part is that your company is receiving a higher percentage of the accounts receivable. This slight addition of a dunning process to your existing system can make all the difference.

Unfortunately, there are cases where the resources applied to obtain the payment equals or is greater than the outstanding amount, and thus the business will likely quit the endevour to focus on recent ones that are more likely to pay. To reduce the time and money spent on dunning notices, many companies are shifting to using versatile automated systems like Payference.

Would you like to discover how businesses like yourselves can achieve a decreased DSO and accelerated payments, generating over 10x ROI using Payference?

Book a meeting to schedule your free consultation today.

For more information write to us at: contact@payference.com