‘Failed Payment’ ‘High DSO’ ‘Past Due’ ‘Customer Churn’— These are situations that no SaaS or subscription-based businesses would ever want to be in.
Life would be a lot easier if all payment obligations could be resolved quickly and easily. In reality, the job of a collector is fraught with difficulties. It takes a lot of time and effort to categorize customers, contact them, and finally get paid. Past dues are common in mid-sized businesses, and one of the most effective tools to deal with them is dunning email.
This is a complete guide for collectors (with pre-built templates) to help write effective dunning emails. But, before we dive into the details, let’s understand the definition of a dunning email. But, before we dive into the details of dunning email, let’s understand how pre-dunning works.
Pre-dunning is the process of sending proactive reminders to customers 30, 15, or three days before the due date. These reminders contain a detailed summary of the invoice and payment details along with the outstanding balance.
Customers often tend to procrastinate going through invoices until the due date. Sending pre-dunning emails could be an opportunity to thank your customers for their business while also subtly reminding them that you expect to receive the payments on time.
Here are some benefits of implementing pre-dunning into your collections strategy.
Pre-dunning helps prevent invoice-related discrepancies, short payments, and payment disputes. Moreover, pre-dunning allows the customer to review the invoices ahead of the due date and raise any issues or concerns they might have.
You can use a pre-dunning email to provide more clarity on the payment due date, the payment conditions, and the implications of late or non-payment. Even in case of unforeseen or unfortunate circumstances at the client’s end, you could begin negotiating on the right foot by reminding the customers that they are indebted to you. Now that you understand pre-dunning, let’s take a closer look at dunning emails.
Dunning email is a transactional email sent to the customers with their account and invoice information to remind them about their due payments.
At some point in our lives, we’ve all encountered a situation when asking for our own money back seems unpleasant. Little do we realize that the other person may have forgotten about it or faced an unforeseen problem in paying back. Similarly, in the B2B world, most of the failed payments are unintentional.
Sending a dunning email with the appropriate messaging is critical for reminding customers of their payment obligations. Moreover, maintaining a positive customer experience is vital to your business’ success. Hence, it is the collector’s responsibility to guide customers through the correct steps to complete their payment process.
Personalizing the dunning email copy and having the right tone are key to the successful collection of failed payments.
Here are some essential pointers to remember when drafting your first dunning email:
Clearly state the purpose of the e-mail and mention the past-due amount. Ensure that your customers understand that their payment is due immediately by looking at the email.
Your dunning email must include suitable payment methods that provide your customers with the ‘pay anytime, anywhere’ experience. Include a call to action with the payment link. Moreover, you must ensure the payment process is simple and quick for a positive customer experience.
You need to set up timelines for your customers depending on their risk categories. Create a sense of urgency about the matter; otherwise, there is a chance your customers might forget about it.
Your dunning email should have a customer care link in it. People are highly skeptical of online payments. As a result, you must provide customer service contact details so that customers can reach out to you in case of any concerns.
An average office worker receives roughly 121 emails every day. Your email must be well-structured to make an impression in such noisy inboxes. Every part of your email needs to be valuable and appealing.
The three essential components of an effective dunning email are:
The subject line of the email is the first thing your recipient will notice and it should be compelling enough to entice them to open it. Amplify the importance of the matter through it. Here are a few examples that you could use as your next dunning email subject line:
The body text of your email should be brief and informative. It must include all the essential information within a few lines of text. A B2B dunning email should be formal and polite, unlike the B2C dunning emails which use a casual approach. The customer must understand the gravity of the situation, so instilling a sense of urgency and tying them to a deadline is important. Here is an example for your reference.
The body of this dunning email takes a direct yet pleasant and formal approach. The first section emphasizes the past-due issue and provides information about the invoice and outstanding amount. The second section includes the payment option.
Customers may have queries related to the payment, so it is always a good idea to include your contact channels at the end.
In the example above, Netflix uses an amicable tone as well provides its contact information and help center details. It adds a human touch and gives your customers a sense of assurance to reach out if things go wrong. At times, a direct link to the FAQ section would also be useful.
Let’s look at some of the closing lines that you can use for your next dunning email.
Now that you understand how to write a dunning email, let’s take a look at some ready-to-use dunning email templates to get a better idea.
This is a pre-dunning email template that you could send to your customers before the payment due date.
We hope this note finds you well.
We are grateful for the opportunity of doing business with you. This is a gentle reminder that payment on the following invoice(s) is due on [due date].
|S.No.||Invoice Number||Amount||Due Date|
We recommend having these invoices processed in your upcoming AP run. If you have any queries about these invoices, please reach out to us.
You can make the payment directly through our portal via ACH or credit card.
This email serves as the first past-due reminder that you can send to your customer.
Hi [First Name],
I hope everything is going well for you.
I wanted to let you know that we are yet to receive the payment for invoice number [Invoice Number], which was due on [Date].
You can make the payment directly through our portal via ACH or credit card. [Link to Portal]
I have attached the invoice to this email as well. Please contact our customer service team at [Contact Number] if you have already made the payment.
This is the second email that you could send to your customers after the first reminder on their past-dues.
Hi [First Name],
This email is the second reminder letting you know that [Your Company Name] has not yet received your payment of [Amount] for invoice [Invoice Number] which was due on [Date].
I request that you take some time out and make the payment at the earliest via ACH or credit card at our portal.
We have also attached the outstanding invoice(s) for your reference. If you’ve already paid, we appreciate it and hope to receive the amount soon. If you have any further concerns, please contact us at [Contact] anytime.
This email template is the third past-due reminder for your customers that binds them within a time frame to complete the payment.
Dear [First Name],
This matter requires your prompt attention. Our records indicate that your account is past due for [Number of days] days. Payment for invoice [Invoice Number] with the amount of [Amount] is due.
According to [Your Company Name] policies, if we do not receive the payment within [Number of Days] days, we may suspend credit for your account.
We, therefore, request you to complete the payment via ACH or credit card at the earliest on our payment portal by clicking the link below.
[Link to Payment]
Please find a copy of the outstanding invoices attached with this email. For any queries, you may contact [Contact Number].
This email template is to notify the customers about the suspension of credit. You can send this final email when the customer is unresponsive, even after multiple follow-ups over a period.
Dear [First Name],
This is to inform you that the credit on your account has been suspended. We did not receive a proper response or action regarding your overdue payments despite several attempts. The following invoices are yet to be paid by you:
|S.No.||Invoice Number||Amount||Due Date|
This would also impact all your in-process and future orders.
You can reestablish credit by making a payment through the link provided below.
Please find the invoice attached for your reference. For any further assistance, feel free to contact us at [Contact Number].
This email sample is for important accounts. It appreciates the relationship to make the customer feel valued.
Hi [First Name],
We immensely value our relationship with [Company Name]. We’d like to inform you that [No. of Invoices] invoices currently have outstanding payments of [Total Due]. [Invoice Numbers] is/are due for payment by [Date].
We have also attached the outstanding invoices with this email for your convenience. We would be delighted to assist you with the payment process and you can contact [Contact Number] immediately if you have any questions.
You can use our payment portal to make an ACH or credit card payment.
Thank you for your cooperation.
This email sample is for slow-paying customers. This uses a more direct approach.
Hi [First Name],
I’d like to draw your attention to the following invoices [Invoice Number] that were due on [Due Date]. A total of [No. of Invoices] invoices amounting to [Outstanding Dues] are unpaid. The outstanding invoices are attached alongside for your reference. Please make the payment as soon as possible to ensure continuity of our services.
Click here to make the payment:
If you need any further assistance, we would be happy to help. Please contact [Contact Number].
This email sample is for fast-paying customers who have a few unpaid invoices.
Hi [First Name],
I hope everything is going well for you. I just wanted to let you know that the following invoices have not yet been paid.
|Sl.No.||Invoice Number||Amount||Due Date|
To make a payment, click on the below button.
Please contact our customer service at [Contact Number] if you have already made the payment. Please see the invoice(s) attached for details.
Your first dunning letter may not always result in recovery, so you need to do additional legwork to increase the recovery rate. Here are a few pointers that can help you improve your recovery rate.
Personalized emails have 2.5 times higher click-through rate than regular emails. Adding the first name and a touch of personalization based on previous interactions or customer information can make a significant difference. Every dunning email should include personalizations that enhance customer experience and set it apart from the mass emails that clutter inboxes.
Losing out on further credit relaxations is one of the key outcomes that customers risk facing when they don’t pay on time. Your dunning emails must make your customers experience the anxiety of losing something valuable. Make an effort to persuade them of the value of your service by emphasizing the benefits they will lose if they do not pay.
Your dunning letters should be polite, respectful, and helpful. Avoid a tone of desperation. Keep the email professional at all times. The first dunning letters should be more polite and focus on solving the problem, but with time, if there is no response from the account, your tone needs to be sterner to create a fear of losing favorable terms.
Imagine you wrote the most excellent dunning email and sent it to your customer. A day passed, a week passed, but there was no response. You sit back and wonder what went wrong that your email was ignored? There is, however, a catch: you can never expect full recovery by sending a single dunning email. You need to send a series of emails at regular intervals if the account is not responding. Sending two to three emails with gaps of one week each gives the best results.
A/B testing is one of the many ways that businesses use to analyze how different dunning email templates perform. For this, you need to come up with two different email copies and send them to two different sets of recipients. The one getting a greater click-through rate would give you an insight into the messaging that works better for your customers. You can then use a similar messaging in your other dunning emails to increase the chances of success.
You may use automation to improve your collections and make your dunning process more efficient. You won’t need to worry about sending dunning emails at regular intervals anymore. The automated dunning process helps to reduce involuntary churn and lets you focus on more complicated tasks.
There are plenty of practical and proven ways to help you manage the effectiveness of your dunning emails. We have listed the five industry-based best practices to keep your customers engaged and win back revenue.
The body of your dunning email should be brief and to the point, with a clear underlying message.
Avoid using ‘Do not Reply’ email addresses. You must make sure your customers can reach you by replying to the email if they face any issues. Often people are too busy to contact customer care and prefer to respond to emails. Enabling replies enhances the customer experience.
Use a clear and concise call to action. Explain the next steps very clearly and make the process simple for the customer.
People often ignore promotional emails, and if you use the same sender for your dunning emails as you do for promotional emails, they will likely not yield the desired result. So it is best to use a different set of sender addresses for dunning. It will ensure faster payments.
Your company logo creates a sense of authenticity in your emails. The customers must feel comfortable and confident seeing the email to proceed with the next steps.
This is all about dunning emails and how to write them effectively. Well, there are no hard and fast rules for writing dunning emails, but one thing to keep in mind is that you must always deliver a good customer experience. Use the tips and tricks discussed in this guide to minimize customer churn by sending effective dunning emails.
Even so, we can not deny the fact that the dunning process is clerical, particularly for B2B businesses. You need to invest time to compose the right dunning letter for your customer. However, companies have started adopting automated dunning with the growing digital transformation, which is a game-changer.
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