Some businesses struggle with the whole invoice process – from calculation through to collection. Knowing how to collect your payments, how to write a reminder notice and when to send a reminder notice – can make the collection process considerably more efficient, and end up saving you money in the long term.
As with all other facets of credit control, having a process for your reminder notices is pivotal to not only obtaining that late payment, but also in maintaining that all-important customer relationship. It’s one of those ‘awkward’ moments in customer communication, and preparing for it before it’s required can take a lot of the sting out of the experience, both for you and your customer.
Some companies use an automated system, but this can actually cause more issues to arise. If your system sends automated reminder letters and notification of overdue debt, we recommend those systems are regularly and vigorously tested.
- Test to ensure the notices are delivered to the right contact and email address.
- Test to ensure the content of the debt is correct.
People are not stationery objects. The correct contact from three months ago may have transferred or been promoted within the company, or may have left the business altogether. Or perhaps their email address has changed. It’s important to ensure your notices are getting to their target, otherwise that automated email is as effective as throwing a brick at a dartboard. It won’t hit or stick to the target.
It’s seems obvious, and almost trivial, but ensuring that the system is gathering the correct data from the appropriate and accurate sources is a cost-saving exercise in and of itself. When invoice amounts, references, or even dates, don’t match up, not only does it result in an incorrect payment, it costs your company in resources and time in trying to correct the problem, with the added bonus of a negative, incompetent impression for your customer. The data in those reminder notices must be correct and accurate as at the time of despatch.
If there is a way in which to tailor the notice to the customer – do it! Particularly if you’ve established regular contact with your customer regarding the debt and payment up to that point through your collection process. It helps the relationship more than the generic email drop ever can.
Here is a basic outline for your Reminder Notices process:
- First Notice – this is your little wave hello. A gently worded ‘the above invoice fell due [insert date]’ etc., may be enough to spur your customer into action. It must follow the terms and conditions agreed upon at the point of the customer account setup.
- Overdue Notice – this is your little nudge. ‘Your account is now overdue and rectification is required as a priority. If payment has been received…’etc. It’s a little more assertive, but also offers a face-saving option for your customer.
- On Hold Notice – this is your little alarm bell. ‘Your account is now on credit hold due to outstanding payment,’ followed by the instruction that you are withholding further supply of goods/services, and that legal action may be taken unless the situation is rectified immediately.
Your focus should always be on your customer, and always follow up. Don’t rely on these documents as the only collection you have. Your customer contact may throw the letter in the bin, or automatically press delete. Always follow up the notice with a phone call, with the aim to resolve the issue.
If all else fails, then you may have a delinquent account on your hands, and you’ll need to refer the matter to your legal team.