Maximillian Frimmer
Maximillian Frimmer
Bring in your money faster with an automated cash collection system

Bring in your money faster with an automated cash collection system 

A study by EOS shows that as much as 19% (5) of all invoices are paid late, which can have significant consequences for the company’s cash flow. Therefore, sending dunning notices and reminders is an essential part of any business’ AR- management. 

In our collaboration with over 2,000 companies in Denmark, we have identified the following three main challenges that many companies experience in relation to the sending of dunning notices and reminders:

  1. The process is manual and time-consuming: Most companies have semi-manual workflows for sending reminders in their ERP / accounting programs. This means that no reminders are sent unless someone runs a process in the ERP / accounting system.
  2. The process takes place with low frequency: The semi-manual procedure means that the status of debtors is not calculated daily, but often only 1-2 times per month. This means that an invoice can often be 10-30 days overdue before the first reminder is sent, and that it might take numerous weeks before an invoice is handed over for debt collection. This slow process leads to unnecessarily high debtor losses, as the probability of recovering an invoice decreases when the debt gets older.
  3. The process does not take place on the customer’s terms: Most ERP / accounting programs can only send reminders by either email or letter, with the same standard text to all customers. Likewise, all customers are offered a FIK code, which is usually the only payment option. This highly standardized communication means that many customers do not receive any form of tailored communication. SMEs or B2C customers in particular prefer texts to letters, and credit card payments over bank transfer. This can eventually lead to late payments and bad customer experiences.

To address the above challenges, we recommend that you implement a solution that can automate and personalize the sending of dunning notices and reminders. With a solution like Likvido, you can build tailor-made ”reminder flows”. Roughly speaking, the solution works like this: 

  • Start trigger: You define a set of “trigger criteria” when a debtor is involved in a reminder campaign. For example, a combination of “payment deadline exceeded by x number of days” and “customer group = 2”. The more precise the criteria, the better, as it subsequently allows you to build bespoke reminder flows per segment.  
  • Communication campaign: Next, you need to design the communication flow for debtors that meets your trigger criteria. A typical flow consists of a series of friendly reminders, reminders and debt collection notices. You can decide which media you want to use for communication (e-mail, text, letter or EAN), and how the debtor is able to pay (credit card or bank / FIK). You can also control when reminder fees are to be charged. You can tailor these flows and the text completely. We recommend that you create different communication campaigns based on different trigger criteria. For example, we see that communication of text and payment via credit card works really well with private debtors, while the combination of letters, emails, EAN and FIK transfers is more suitable for larger business customers.

  • Approvals: You can either choose to automate the entire reminder procedure completely, or build flows that include manual approvals. For example, you can set up a rule that says that every time a reminder 2 is sent to a customer in the customer group “large accounts”, the system must create a “to- do” to the responsible Key Account Manager, who must contact the debtor and approve a possible transfer for debt collection. 

This system enables faster and automatic sending of dunning notices and reminders in the form of customized and personalized workflows, so you can perform targeted communication with your customer segments and use the channels they already use the most (eg e-mail, text, EAN or letter).

By supplementing with a dedicated system, you can also:

• Save time (the manual reminder process is automated)

• Get faster payment

• Reduce debtor losses 

This is how automation of cash collection helps you build better customer relations

From a customer perspective, this solution also makes sense. A study conducted by the technology company Nuance shows, for example that:

  • 85% of consumers with a smartphone admit that they suffer from so-called ”digital memory loss”.
  • 27% indicate that they have forgotten a payment during the previous 12 months.
  • 84% expect to receive proactive reminders from the companies they work with.
  • 33% believe that reminders can prevent them from receiving reminder fees.
  • 90% of respondents prefer to be a customer of a company that sends proactive reminders. 
Source: The Remind Me Generation (Nuance, 2016).

The statistics show a characteristic pattern of behaviour amongcustomers, who increasingly expect:

• that their mobile devices remember on their behalf

• that companies actively remind them of reminders- especially via text.

An integrated Credit Management System will be able to meetthis demand in the form of a tailor-made and automatedreminder process that matches your customers’ needs,communication behaviour and tone of voice.