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Managing accounts receivable can be challenging, but having a structured approach to writing collection reminders can make a significant difference. Many businesses that have embraced automated tools such as payment reminder software are able to simplify this process with dunning emails and late payment reminder templates that ensure consistency, save time, and improve efficiency.
Here are a few tips to keep in mind:
1) Have a clear A/R strategy in place
What are the main goals your A/R team is trying to achieve? Some businesses simply want to automate as much of their A/R process as possible, while others are primarily focused on managing their customer risk. Make sure you know what your A/R team’s goals are so that your policies and processes regarding your dunning emails and late payment reminders reflect them.
2) Take a proactive approach
A/R and financial teams tend to send payment reminders too late, when the account is already past due or if they are in immediate need for cash. It is more efficient to send these reminders as soon as the invoice is issued and also another reminder at least a week before the payment is actually due. Having a defined plan will help you to act systematically in order to collect your receivables in a timely manner.
3) Include all the necessary details
Make sure to provide all the necessary details for contact and payment so your customer has all the information they need in the invoice itself.
Focus on the essentials, such as:
- Invoice amount and reference number
- Payment deadline
- Your contact details
- Clear instructions for payment
By keeping it short and including only the necessary details, you’ll increase the likelihood of timely payment. Payment reminder software can help you follow up on unpaid invoices or upcoming payment deadlines as your business grows and your A/R team must manage more invoices simultaneously.
4) Include a clear call to action
Clearly communicate to the customer what is expected of him or her, and the consequences of inaction. Ideally, these calls to action should be personalized according to the situation of the customer. For example, the late payment reminder should include the customer’s name, invoice amount, and a link to a payment portal, or encourage the customer to contact your billing team with any questions related to the payment. Link to the appropriate resource when possible so there is no question of what your customer needs to do next.
5) Consider leveraging the latest AI technologies
Generative AI can assist your A/R team in writing personalized late payment reminders that will resonate with different customer segments at scale while maintaining a professional tone. Consider experimenting with tools such as ChatGPT with a variety of prompts to generate texts with different subject lines, tones, and tailored to specific circumstances. For example, it can easily generate an email text for a dunning email to be sent a few days after the customer returns from a vacation.
6) Communicate a consistent dunning message
With the implementation of A/R software, your business can gain visibility into the number of dunning emails its customers get, the content in each email, or when their A/R representatives decide to follow up. You can also see which messaging is more successful based on past results, using it to standardize the dunning messaging process to ensure that it has the best possible chance for encouraging timely payments.
7) Keep your tone polite and professional
Many businesses are emotional or add remarks and irrelevant information to their letters. This diverts a customer’s attention from the most important thing – paying your invoice ASAP. Maintaining a professional tone helps preserve the business relationship for future interactions.
8) Have supporting documentation
If there was a contract, purchase order, or order form signed by your client, it is best to have it on hand in case the client tries to dispute payment terms, amount or payment milestones. Even a CRM log is better than nothing. Make sure to have a reminder log, proof or record to offer in the event a customer disputes receiving any prior reminders or being invoiced at all.
9) Include different payment options for customer convenience
Offering multiple payment options available will help your clients to settle past due accounts faster and easier. For example, foreign clients that cannot make ACH payments should have additional payment options available such as credit card payments. Other customers might want to be able to send electronic payments.
10) Know when to cut your losses
Determine ahead of time the point at which you are no longer escalating the invoice of the delinquent client. This could be a timeline or a specific overdue amount that determines when you pass the case to the collections agency or take legal action. Instead of pursuing high-risk clients who may not end up paying, you should focus your energy on maintaining strong relationships with reliable customers while minimizing financial risk.
How Gaviti Helps You Craft Your Payment Reminders to Improve Cash Flow
A/R teams today face challenges such as the ability to effectively monitor and enforce processes, a lack of standardized processes, and a centralized source of truth for accounts receivable that leads to delayed or inconsistent data updates. However, many of these challenges can be solved with autonomous technology that enables systems to perform tasks on their own, without needing constant human control or supervision.
Gaviti’s autonomous invoice-to-cash A/R management platform combines accounts receivables automation and reporting with autonomous technologies, while using AI to streamline A/R and achieve optimal results.
The platform offers the following benefits:
- Personalized and automated dunning workflows that send reminder emails before an invoice is due, optimizing how specific audiences receive which reminder and when, significantly increasing engagement and improving the chance of timely payments.
- A/R reports updated in real-time with data insights far more advanced than what is possible in Excel. That includes KPIs for both individual and team A/R performance, cash flow analytics and DSO (Days Sales Outstanding), collections efficiency, and aging analysis so that you can continuously optimize your collections strategy.
- Full visibility of dunning performance to deliver all A/R stakeholders a clear view of every step of the dunning process, including the ability to see which messaging is more successful based on past results.
- A Self-Service Payer Portal that enables customers to conveniently make payments online 24/7 with a variety of payment options including ACH, electronic payments, debit and credit cards , and more. Customers can also use it to view invoices, payment history, and credit applications and disputes.
- More efficient A/R operations with an AI copilot that suggests precise credit limits, builds smarter A/R workflows, identifies patterns and trends in customer behavior, suggests improvements to dunning emails to increase response rates and improve cash flow, and ensures remittance data is matched accurately.
Want to learn more about Gaviti’s autonomous invoice-to-cash A/R management solution and how it can leverage AI to improve cash flow? Get a demo today!
See why Gaviti is ranked as the #1 Credit & Collections Software on G2:
