11 Collections Email Templates to Double Productivity of Operations

This ebook unveils the 11 most effective email templates that will help you collect your receivables faster. The ebook is a culmination of our work with credit and collection experts over more than 400 credit and A/R transformation projects across the world.


Chapter 01

The State of Collections Management

Chapter 02

A Strategic Look at Collections Correspondence

Chapter 03

The 11 Unbeatable Collection Templates

Chapter 04

The Role of Technology in Collections

Chapter 05

About HighRadius
Chapter 01

The State of Collections Management


Most industries, apart from those that deal with consumers, work on a trade credit model. Suppliers and buyers enter into an agreement that refers to “payment terms” which dictate the conditions under which a seller will complete a sale. Depending on the industry, payment terms may vary widely from ‘payment in advance’ to payment ‘90 days after the invoice date.’
In an ideal world, suppliers wouldn’t need collections teams as buyers would pay ‘in full and on time,’ every time. However, a survey revealed that 48% of customers do not pay on time and businesses lose 52% of the value of receivables for invoices which are more than 90 days past due. To keep close tabs on the health of their receivables, finance departments have relied on a key metric – DSO.
A higher DSO implies lower cash on hand, therefore requiring companies to rely on borrowings to fund operations and keep business running. Collections teams are therefore necessary to maintain a low DSO, as they help convert receivables into cash and assist the finance team to reduce borrowing costs.
However, as most readers would agree, credit collection is no mean feat. Despite all the advances in technology, collections continue to heavily rely on old-fashioned dunning correspondence to remind customers and creditors about invoices that are due, or already past-due. Growth in businesses, through organic and inorganic expansion, has only meant more demand. This has led directly to more transactions with an ever-rising number of customers. The collections challenge is not going away.
A great deal of insight into the future of collections management could be gained by looking at how collection processes have evolved over the years. The rest of this chapter takes a closer look.

The Standard Collections Process

Process of collection management

  1. Create Prioritized Worklist
    The first step in the collections process is to create a prioritized worklist. This worklist determines the order in which the collector is going to work or initiate the dunning process on the open or past due invoices. It is imperative that this worklist is prioritized based on some factors like dollar value or the period of past due (90days+ past due/ 30 days+ past due) of the open invoices. Once the list is prioritized, collectors can start contacting the customers.
  2. Send and Log Customer Correspondence
    Now, the collectors can contact the customers. The cornerstone of the collections process, correspondence relates to any activity that is performed while reaching out to a customer for payment. This includes dunning, reminders, sharing of account statements and any other information that is required by a customer. It requires a system of record. Collectors need to keep a track of all the information shared during a correspondence activity or a phone call. This could include noting down specific queries made by the customer or any other follow-up tasks that are to be performed in the future. These logs are maintained by the collectors for all customer correspondence.
  3. Tracking Payment Commitments and Setting Up Reminders and Follow-Ups
    Customers often inform collectors about payments that they are going to make in the future. However, the obligation of keeping track of whether these commitments have been honored or not relies on the collector. Collectors need to keep a close watch on all the commitments made by customers, and follow-up if the payment has not been made. Even for these follow-ups, the collector might need to set-up reminders on the sheets to prompt them to correspond with the customer again until the payment is made.
  4. Performance Analysis
    To monitor the performance of the collections management process, it is imperative to regularly analyze the deliverables of the team. It helps to identify the strategies working best and driving positive outcomes as well as to weed out all possible poor-performing tactics from the collections process.
  5. Defining Customer Strategies and Rules
    A collections management system should be based on strategically determined rules and strategies. This is instrumental in defining recommended actions for collectors. Having a well-defined collections action policy in place ensures that every collector on the team is following a course of action that is most likely to result in positive outcomes.

The Major Bottlenecks of the Collections Process

While the collections team deal with several kinds of customers depending on the industry in which they operate, there are a few common collections challenges that occur across all industries:

  1. Lack of Collectors to Deal with The Growing Volume of Due Invoices:

The growing volume of Due Invoices
This is the most common problem faced by collections teams worldwide. Most collection managers find their teams overstretched. However, even adding more resources is not necessarily a perpetually scalable [1]solution. With growing businesses and receivables volume, the number of overdue receivables also keeps on increasing across various geographies. While the initial positive impact in terms of DSO reduction may be visible with the onset, the costs of a constantly growing team will soon be unable to justify the results. Organizations will not be able to afford to add resources to dig into the mounting receivables volume.

  1. Prioritizing Customers for Collection Activity
    For years, collections analysts have traditionally relied on aging lists to find out the items which need to be worked on any given day. The flaw with this approach is that it does not take into account the variables which impact collections outcomes. Some of these variables are discussed below.
    • Items with Open ‘Promise To Pay: If there are items with an open promise to pay or items with a future payment promised on a date, these items should ideally be excluded from the ‘To Be Collected’ accounts list (invoices on collector’s worklist henceforth referred as accounts), unless a dunning activity is planned very close to the ‘pay-by’ date.
    • Dispute Cases: All open dispute cases, which have not yet been resolved or identified as ‘invalid,’ requires dunning should also be excluded from the ‘To Be Collected’ accounts when preparing the list of open customers based on outstanding accounts.
    • Items with a current dunningnotice: Repeatedly including items which have been dunned recently leads to a lot of redundant collections Moreover, it also impacts the customer relationship. If the customer has been recently communicated to, it is best to leave them out of the collections list for a pre-determined interval of time.
    • Items arranged for payment: All amounts that are:
      • collected with a debit memo procedure
      • has an account statement balance containing a payment notification from the bank should be excluded from the ‘To Be Collected’ accounts, when preparing a collection list.
  2. Identifying The Right Contact at A Customer Organization
    Supplier-buyer relationships are becoming very complex with businesses supplying to many independent business units or divisions within the same buyer organization. The problem of identifying the right contact for dunning is worsened by the lack of proper customer master data. Collections analysts remain unclear about whom to contact at the customer organization. For suppliers selling to large national retailers, such as Walmart and Target, such problems are even more common
  3. Applying The Right Collections Approach for Each Customer
    Collections teams deal with customers and buyers of all sizes, from small moms and pop stores to large retailers. In the absence of a well-defined strategy to select the right model and style of communication, customer correspondence becomes a challenge. The sheer volume of customers means that calling every customer is not the most judicious use of time. Variables such as past payment behavior and customer type should also dictate the mode of communication.
    • A small and medium business customer who tends to pay just by receiving email reminders should ideally be sent only email reminders.
    • Key large accounts require a qualitative approach that emphasizes building a relationship with the customer and working out mutually beneficial solutions to issues.

    Collections analysts, therefore, are always challenged by their single biggest responsibility of reaching out to customers. Studies show that collections teams have struggled with customer correspondence and close to 70% of collections calls go to customers who would have paid even without dunning notices or telephonic reminders.

  4. Collections Operating in A Silo from Other Receivables Processes
    Many teams operating in the credit and accounts receivable processes are often seen as operating in silos. This modus operandi has significantly reduced operational efficiency. The disconnect between teams results in additional manual work and clerical collaboration required by collections teams to access data which is usually vital for their success:
    • Sales terms, deal sheets or discounts offered by sales teams
    • Information on unapplied payments
    • Information on unused credits
    • Status on open and resolved deductions

    Timely access to accurate data could greatly improve the effectiveness of collections operations. However, siloed systems and poor collaboration have meant that collections teams continue to lack the necessary means to improve efficiency.

  5. Ad-Hoc Information Requests from Customers:
    The customer is king, and as purported champions of good customer experience, collections teams have a hard time saying ‘no’ to customer requests. Customers routinely request additional invoice copies, account statements and bill of lading, proof of delivery, among other invoice and order-related documentation.
  6. Most collections analysts spend at least 30% of their time catering to such ad-hoc requests given that the requested information is scattered all over the place. For example, downloading a proof of delivery document requires analysts to go to the carrier website, enter tracking numbers and then download the required materials. Declining ad-hoc requests from customers is not a solution, as it is only likely to delay payments. The solution has to be sought that brings all the necessary information to a single place for collections analysts to access and serve.

  7. Measuring The Effectiveness Of CollectionsOperations
    While DSO is a great metric to measure the overall health of accounts receivable, A/R managers and leaders struggle with performing a root-cause analysis when faced with higher than expected DSO. One of the more important factors that impacts DSO is ineffective collections operations. And the inability to accurately measure the performance of collections teams could very well be the Achilles’ heel of even the most successful A/R departments. Collections managers routinely struggle to find answers for questions similar to the ones described below:
  • Which mode of communication works best for which segment of their customer base?
  • How do we conduct comparative analysis of collections analysts on the effectiveness and outcomes of their activities?

Summary of challenges
While some teams and companies innovate with new processes and systems, others fail and falter as they continue plying old solutions to very new and unique problems and challenges. Due to the sweeping changes over the last few years, many teams are unable to deliver the results to which their previous finance teams were accustomed hence calling for a change.

Solutions to Common Collection Challenges

Collections Management Systems

Figure 5: Types of Collections Management Systems

While companies are diving in to employ the latest collections management software, it is important to obtain a very clear understanding of the different types of collections management solution available.

Receivables Master Data Management Systems
The most basic type of collections management solution will help the teams gain a consolidated view of all the customer accounts along with important information related to open invoices and customer contact personnel. This kind of system is most useful for teams that already have a solid communication execution and tracking platform in place. The primary purpose of such systems could be to help analysts review the data and manually prioritize and create their account lists for collection.

Dunning Activity Management Systems
The next level of the solution includes functionality provided by receivables master data management systems described above, but also handles dunning activity. These systems serve as a means of record-keeping to track all collection activity and correspondence. Some of these systems are also able to help collections team leaders to define strategies and rules based on various collection scenarios, which are executed by the collection analysts in the course of their work.

Correspondence Automation Systems
Considering that correspondence is the single most important activity performed by the collections team, it becomes justified that there exists a type of system that caters to this particular requirement. Ideally, a correspondence automation system should handle and maintain multiple correspondence templates that are needed by the collection analysts. In addition, these systems should perform correspondence activity across mediums including print and mail, email and fax, as well as keep track of all phone-based collection touchpoints. Compared to the previously outlined systems, these solutions are completely capable of automating manual work involved in creating correspondence, selecting accounts and contacts and then sending out emails or dunning notices.

Integrated Collections Management Systems
One of the challenges discussed earlier was how collections teams end up working in silos, isolated from key information that is crucial for successful collection outcomes. An integrated collections management system should be capable of linking all data-sources across the receivables domain – including deductions, disputes, payment processing and invoicing – and be able to present a single source of truth for collections teams with which to work. Organizations are already leveraging integrated collections management systems to free up their teams from the manual work involved in preparing collection lists, sending out email correspondence, searching for information and documentation from different teams and keeping track of overall collections activity. This automated process allows teams to focus on the most high-touch aspect of collection activity that involves dunning via phone.


Collections Management is indeed one of the most complicated of the accounts receivable processes. Further, leaders in the Collections Management field are faced with multiple challenges – both internal and external. However, most collections leaders identify correspondence management and correspondence automation as the lowest hanging fruit towards effectively transforming receivables operations.
The next chapters focus on correspondence automation and explain how the approach towards customer correspondence requires a drastic overhaul.



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