We talk a lot on the Gotransverse blog about how to set up the billing systems that enable your business to grow revenue exponentially. But what about the process of actually collecting that revenue? This process—two processes, actually—is called collections and dunning. Here, we'll closely examine what this looks like and how Gotransverse makes it easy.

What Are Collections & Dunning?

Collections and dunning go hand in hand, but each serves a slightly different purpose:

  • Collections is the process of trying different ways to collect payments if the default payment (such as the stored credit card or auto-draft) doesn’t work.
  • Dunning is the process businesses use to remind and encourage customers to make their payments on time, including initial reminders, overdue notices, and even suspension of services.

Why are collections and dunning so important? At their most basic, these processes are critical to ensuring businesses get paid for the products and services they sell. After all, a significant portion of revenue leakage comes from failing to collect full payments. Still, robust collections and dunning systems can stop those leaks and help businesses collect payments smoothly, efficiently, and fully.

Proactive Collections & Dunning Processes

We often think of collections and dunning about ensuring late payments arrive. But we don't have to wait until payment is overdue—nor should we—before starting these processes. After all, collections and dunning can also prevent accidental churn by making it as easy as possible for customers to pay on time in the first place. This can include a variety of different strategies:

  • Personalized renewal notices for subscribers
  • Advance reminders to update expired or outdated credit card information
  • Customized payment plans based on each account's needs

Read our recent blog post for more on proactive collections and dunning tools.

Past-Due Collections & Dunning Processes

Ensuring it's easy for clients to make payments on time is ideal. But it's only sometimes possible. Suppose all those proactive measures fail and a client's payment exceeds the due date. In that case, the dunning and payment plans can escalate from gentle payment reminders to late fee notifications to service suspension warnings (and actual service suspension) until payment is received. Here are a few strategies to set up:

  • Payment Retries: Errors like insufficient funds occasionally occur even when customers are on top of their payments. Configurable, automated payment retry schedules enable attempts to collect on submitted (but failed) payments without further hassling customers.
  • Configurable Dunning Reminders and Actions: Automated nudges—both gentle and not-so-gentle—can encourage customers to make good on late payments. But remember that not every customer needs the same type of reminders, and what works well for one kind of client may be a disincentive for another.
  • Internal Payment Notifications: It’s frustrating for customers to receive overdue notices for bills they’ve already paid. It's essential that, when overdue invoices are paid, the finance department (and anyone else involved) is automatically notified so the customers can be moved out of delinquent status.
  • Payment Plans for Delinquent Invoices: When customers get behind on their payments, businesses struggle between collecting their overdue revenue and maintaining—or repairing—relationships. The suitable collections and dunning systems can support various payment plans to help delinquent customers repay their debts.

Automating Collections & Dunning

Clearly, a wide variety of customized actions and detailed workflows are involved in successful collections and dunning processes. As companies grow, more than old-school billing platforms and Excel spreadsheets is needed to support these processes (or any part of the end-to-end billing process, for that matter). Instead, forward-thinking businesses are embracing billing systems that automate these processes, taking the manual intervention, opacity, lag time, and guesswork out of collecting revenue. Though nobody truly enjoys paying for goods and services, collections and dunning remain critical to the customer experience, and the right platform can ensure a frictionless interaction every time.

Does your business need to streamline collections to improve cash flow? With Gotransverse, dunning has never been easier. You can automate notifications, configure payment plans, age accounts receivables, and more. Remove the stress from collections while keeping track of outstanding balances. You can learn more about Gotransverse’s automated collections and dunning tools in our data sheet and discover more about our platform by taking a virtual tour today. Then, when you’re ready, request a demo, and one of our experts will gladly walk you through our platform and processes.

Gotransverse’s “Don’t Worry, Bill Happy” series is a “back to basics” look at foundational components of modern billing systems and processes and how the Gotransverse platform makes even the most complex billing needs easy. This week, we take a look at collections and dunning.