Tips for Dunning During COVID-19
A crisis is the most important time to stay on top of collections in order to make sure your company has enough cash on hand. It can be a struggle to find the balance between being flexible with customers while trying to maximize your own company's cash flow. We offer the following tips to do just this; keeping your customers' health and your company’s both a top priority.
One general point is that the suggestions below assume that you are performing some type of credit analysis before extending terms or payment plans to your customers. This is new to many of us, so please refer to this guide for tips about the credit review process. It includes suggestions from the heads of Credit & Collections at Slack, Snowflake, and Veeva Systems.
Seek opportunities to be compassionate (if you can)
In a recent webinar we hosted for CFOs, the former CFO of NetSuite, Ron Gill, said, "Look for opportunities to be compassionate. If your balance sheet can take it, look at proactively extending billing terms to customers." Being compassionate in these circumstances can extend to the language you use in your dunning campaigns as well. Take the time to be personable, let your customers know that you care and that we’re all in this together (because we are). Let them know that as partners, we will work towards a solution.
Support customers who have a good payment record
There are customers that always come through at the end of the month and, their payments are either early, on time, or they let you know if something is wrong. This is a strong indication that their cash flow is well-managed and that they prioritize your product as an important part of their business. These customers should be flagged in your system with tags that are easy to apply. A good system will then let you create separate campaigns with softer language for these customers. Here is where you can be extra understanding, if they reach out with new circumstances, don’t be afraid to cut them some slack. Also, review their credit to determine if it’s possible to provide a payment plan that helps them with their cash flow and gets some cash in the door today, instead of delaying the entire invoice.
Offer more ways to pay
Business-as-usual might be to receive and deposit manual checks from your customers. Given the current stay-at-home orders around the world, this isn’t the most efficient process. You might have checks sitting in limbo at your closed office. Look into alternatives like the Tesorio Financial Care Center that offers a variety of payment options, including credit cards, debit cards, and bank transfers. If you can easily embed click-to-pay into your dunning campaigns, you may be able to start receiving payments more quickly.
Lock in promise-to-pay dates
Promise-to-pay dates are an easy way to establish a form of commitment from your customers about when you can expect payment. Locking these in early with customers takes the pressure off so you don’t have to follow up as frequently, and it reinforces good communication. You can include this in your dunning too! Sometimes it’s easier for a customer to respond to you with an expected payment date, rather than an explanation about why they might be late. These can be easily posted in Tesorio so you can track who is going to pay you and when on a daily basis. The power combo is adding dunning steps when customers miss the date they promised, and then automatically notifying your sales or account management team so they can help follow up too.
Use your dunning campaigns to tell your story too
To cope with the crisis, you might have decided to offer more ways to pay, provided insights and tips via webinars or blogs, or even made a new product or feature that can make your customers’ lives easier. Use your dunning campaigns to showcase how you’re going out of your way to help your customer base and build empathy. These days we are spending much more time than usual in front of our screens under a lot of pressure and it can be a breath of fresh air for your counterpart in Accounts Payable to hear about something other than a bill they owe. This can help build loyalty and strengthen your relationships, and in the long run, we’ll all be remembered by how we went out of our way to help even when times were tough.
Compassion and support are key during a crisis. There are many mutually beneficial solutions worth exploring that help everyone to not only survive, but thrive. Investing a little bit of time to update your dunning campaigns can go a long way in demonstrating to your customers that you understand their needs. Technology can help you do this in an automated way, but regardless, it’s still worth the effort so you can keep the cash flowing at your company while supporting your customers and vendors. If you’re interested in exploring ways to automate this entire process, reach out to firstname.lastname@example.org for help.