What is dunning management?
Dunning management is a way for businesses to deal with customers who haven’t paid on time. It helps find people who haven’t paid their bills or might not be able to pay soon. The system is set up to send customers automatic reminders and payment requests to get them to pay or change their payment information. This keeps debts from building up.
Dunning management usually starts by getting information from customers at the point of sale, like their address, email address, phone number, and so on. This information sends customers automatic emails, texts, or letters with payment requests to keep them interested and make them more aware of past-due bills.
Synonyms
- overdue accounts management
- debt collection management
- management of outstanding payments
Advantages of Good Dunning Management
The main goal of dunning management is to ensure that payments are made on time so customer interactions don’t get hurt. Companies can avoid losing their reputations by sending personalized messages that consider each customer’s specific situation and preferences. This way, they can keep late payments from turning into defaults.
It helps with cash flow.
Better cash flow is one of the perks of dunning management. Automating the accounts payable process helps businesses keep better track of when they get paid by customers and track how much money they have coming in. This helps them figure out how to manage better their cash flow, leading to more stable finances and better decisions. Dunning management can also help lower bad debts by making it easier for businesses to quickly find past due accounts and take care of them before they can’t be recovered.
Less revenue is lost, and customers leave without a reason.
A Profitwell study of customer churn in SaaS companies found that 40% of all churn is due to customers who haven’t paid their bills on time. Dunning management wants to find customers who are likely to cancel their service or contract because their credit card has expired, their limit has been exceeded, there are problems with processing their payment, or they think they have been falsely protected from fraud. You can stop passive churn and income leaks by trying to process payments again or letting customers change their billing information.
Customer satisfaction went up.
One more benefit is that customers will be happier. By managing the dunning process, businesses can quickly and correctly let customers know when their payments are past due. Customers will know what’s going on with their accounts, which can help improve relationships with them. This helps businesses and customers trust each other, leading to stronger ties that can help businesses keep customers longer.
Increases the efficiency of operations
Lastly, one more benefit of dunning management is that it makes operations run more smoothly. Businesses save time and make sure they get paid on time by automating the reminder process. This way, they don’t have to keep track of each payment or account balance due date by hand. Also, automated solutions often save money that would have been spent on hiring people to do these jobs by hand.
Automated management of dunning
Automating tasks like sending invoices, notes for payments, follow-ups on payments, and other related tasks is what dunning management software is meant to do to help businesses collect debts. Dunning management could be a separate program or a part of billing software. Businesses can improve their debt collection processes with dunning management software. This saves time and lowers the risk of mistakes or missed payments.
The software uses complex formulas and data analysis to determine what customers are most likely to miss or be late on payments. Then, it gives you thorough reports about those customers’ payment histories and finances, which you can use to make meaningful choices, like what to do when a customer is late on a payment. The software also has automated tools that let you send email or text message reminders for payments and track how customers respond. Businesses can keep track of what’s happening with their customers’ accounts while focusing on running their businesses.
Billing software can help keep customers by:
- sending out credit card expiration notifications
- detecting account changes and reminding customers to update their payment information
- automatic retry of failed or incomplete payments
- sending renewal notifications
Dunning management software helps businesses make their billing processes more efficient by automating routine chores like sending invoices and keeping track of renewal cycles. It also helps with collecting debts. This saves staff time and makes sure that payment records are correct. Dunning automation can also benefit more prominent companies with many departments that deal with different kinds of customers because it can make communication easier and billing more efficient.
