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Six Success Factors for Customer-Focused Receivables

According to statistics by the IMF as well as different studies, there is still work to be done on receivables management. Over 152 billion USD debt worldwide, with 23% of receivables not paid in time in Europe – how can we improve the issue?

The management of unpaid receivables is hard. The processing of unpaid receivables requires a high percentage of employees’ working hours. Employees who are often not available for the required amount of time and who are partially not even trained specifically in receivables management. In order to be successful in receivables management, you need a great deal of intuitive feel. Your aim is to remind customers of their receivables, as gently, but also as effectively as possible. Situations in which the customer, encounters negative experiences should be avoided.

Anyone who uses the term “debtors” has failed to understand receivables. For a modern and customer-orientated receivables management based you need a new customer approach that is centered around the customer needs.

We must therefore reconceptualise the issue of receivables management. In my opinion, there are six success factors which are key for a modern and customer-focused dunning system:

  1. Digital channels: the modern dunning system should adapt to the customers’ communication habits. In particular, this means not only relying on letters for communication, but, most importantly, utilising digital channels such as email or SMS to effectively reach the customer.
  2. Tonality: in most cases, anyone who makes threats often causes more harm to the target audience than encouraging to make a payment. We must choose a tonality adapted to the situation and the customer to remind the customer and encourage them to make a payment. Solution orientation at eye level should be the motto here.
  3. Landing-page: a digital communication channel should always provide a link to a website, as customers can use this to start communication and receive more information to the claim.
  4. Payment methods: modern payment methods such as direct transfer, credit cards and PayPal should be offered on these websites in order to reduce friction and minimise the payment barrier.
  5. Speed: Why wait until it’s already too late or until the payment deadline has already passed? Sending out a friendly reminder before the payment deadline demonstrates the focus on service and spares dunning fees.
  6. Automation: the process should be highly automated and run so “smartly” that the employees do not have to work at full capacity. For this purpose, intelligent software achieves very good results.

In addition to these six success factors, we at collectAI have learned from our clients that it is very beneficial to use professional receivables management not only in the late stage debt collection process, but also for dunning. This is because the customer is able to make a payment far more quickly, and even more importantly, a large proportion of the receivables with payment disruptions does not go through the debt collection process. In turn, this means that employees do not have to work at full capacity. Through a smart dunning system, the customer has a significantly better buying experience – one that is crucial for the customer retention.