How to create the right dunning strategy for your organisation
Dunning, also known as collection management, is a vital process in credit control. It is the system to chase outstanding payments, thus influencing payment retrieval. Customers not paying their invoices on time can have a number of reasons but it all has one thing in common: overdue payments create a lengthy and difficult process. Having a strong collection management process in place reduces the risk of overdue payments and will allow for a better relationship with your customers. Read on to discover what the right dunning process can do for your organisation.
To implement successful dunning, the first step is to design a predetermined, consistent framework to gain remuneration. For example, when an invoice becomes overdue, send an initial reminder after 5 days. If it remains unpaid, send out another reminder at 15 days, and a final reminder after 30 days. After this, legal action should be started.
By sticking to these dunning processes, customers recognise the structured nature of your company and this will send them a clear message that invoices should be paid within the set timeframe. In addition to inspiring timely payments, this format enables you to pinpoint where issues occur during the process.
Solve issues and improve your dunning process
Once structured dunning is in place, you can implement dispute management processes. This allows you to look into issues customers have raised with invoices and processes. The sooner you resolve a dispute, the sooner you can get back to chasing payments. This step will reduce overdue balances and improve your cashflow. On top of that, you solve customer disputes faster which will result in better relationships with your customers.
Build stronger relationships with your customers
Customer engagement is increasingly important. With a structured dunning process, you can utilise vital information for specific customers and can address them accordingly. For example, the knowledge that a customer regularly avoids making payments can influence the decision on whether to release an order to them. Additionally, this data helps segment customers into homogenous groups, in turn determining other aspects such as personalised payment terms or extra discounts.
CreditManager for your dunning strategy
An effective dunning strategy can benefit an entire business by increasing cash flow, lowering overdue payments and improving customer relations. It will encourage credit controllers to place a greater emphasis on communication with customers. The best dunning strategy isn’t a one-size-fits-all approach. But not to worry, Visma | Onguard’s CreditManager is a great tool to create a fitting dunning process for your company. Read on to discover more of how CreditManager can positively affect your credit management.