10 Ways Payment Reminders Accelerate Your Billing Cycle

10 Ways Payment Reminders Accelerate Your Billing Cycle

Payment reminders are perhaps the simplest, most flexible solution to reduce routine late (or delinquent) payments. So why aren’t businesses taking full advantage of this simple, easy, effective tactic?

Some business owners are nervous about implementing new software tools that require extensive training to launch. Others are still operating on manual or paper reminders that may not reach customers before their payment due date or come in a format consumers dislike or ignore.

Now, with the accelerated rate of technology adoption, may be one of the best times to explore how a payment reminder system can work for you and your business.

Here are ten reasons you should create a reminder system or update your current policies and procedures to include a payment reminder plan.

1) Reduces Manual Payment Reminders

Many small to medium AR teams and businesses use manual reminders by telephone or send paper statements by mail. This strategy is slow and time-consuming for your staff. Call blocking measures and spam calls are making it hard to reach people by outbound phone call.

Even if your call isn’t flagged or blocked, most consumers will ignore a phone call from a number they don’t know. The best solution is to find a payment reminder system that caters to consumer preferences. If a customer doesn’t like phone calls, you should be able to offer automatic payment reminder emails and text messages.

This type of system serves customers the way they prefer, while simplifying office workflows for your agents.

Consumer Email Statistic

2) Increases Timely Payments

The majority of customers don’t mean to ignore a bill. Instead, other priorities in life usually take over. It’s not surprising, especially among companies that require a large gap of time between service, invoicing and billing due date.

The wider the spacing between each event, the more opportunities for people to forget a due date or even that they owe you money. Sending well-executed reminders gives consumers the push they need to resolve bills before they’re late.

3) Decreases Recurring Payment Schedule Errors

Many recurring payment schedules are tied to a debit or credit card. What happens when your customer’s card expires before a payment is processed? What if a customer experiences a financial hardship you’re unaware of?

Life moves fast. Customers could be dealing with any number of issues from one payment to the next. Reminders nudge people to reach out and update card information, ask about financial aid options, or change their schedule to work with their new circumstances.

John Chebat Quote on Using Text for Payment Reminders

4) Provides Better Customer Service

Catering to consumer preferences and offering greater convenience have both been trending in business for years. Sending email or text reminders to your customers gives them a simple way to make the buying and payment process faster and easier.

This effective communication strategy prevents uncomfortable misunderstandings with customers throughout their billing cycle. Surprise billing is not a good idea and no one wants to be told they are behind on a bill – especially when they feel blindsided learning their due date has passed.

Consumers who are told they’re late on a bill – without being warned they still owe – aren’t going to be happy. Reminders keep customers informed, happy and on time with financial obligations.

5) Boosts Revenue Through One-Time Campaigns

If you haven’t addressed late payments in the past, it’s time to clean up your accounts. Creating a one-time payment reminder campaign for late payments is a great way to bring in extra revenue.

This type of campaign can also help you pinpoint customers that are experiencing financial hardship or have other personal roadblocks to payment. Clearing these types of late payments boosts your bottom line, cleans up your records and will give you insight into future accounts with similar patterns of late or nonpayment.

One approach you may take to your reminder campaign is to segment groups by how late their payments are in an accounts receivable aging report, tailoring messages to each depending upon the urgency for payment.

Accounts Receivable Aging Report Definition

6) Increases the Bottom Line With Proactive Use

A one-time campaign will clean up your system but it won’t stay organized for long if you don’t continue to use reminders. A boost to your revenue after a one-time campaign is good. A higher, more reliable revenue stream all year long is better.

A proactive approach to payment reminders stops issues before they happen. Create a reminder schedule for all payments or schedules going forward to avoid future late payment issues.

7) Pairs Well With Regulation E Compliance Practices

Regulation E applies to any entity that uses Electronic Funds Transfers (EFTs) to accept payment. Nearly every business takes EFTs for at least a portion of their payments, so owners need to understand how to comply with Regulation E.

If your company offers recurring payment schedules to help consumers pay off their bills, you must receive authorization prior to the first payment installment. The tools needed to accept fast, secure electronic authorization help you comply and can double as a reminder system for future payments.

Using the same tools for compliance and service help you get more out of your investments and streamline workflow best practices.

Professional Payment Reminder Considerations
Is it an on-time or late payment? This can change the language, cadence and urgency of your message.
Include account or invoice number.
Include payment amount.
Include when the payment is due.
Send itemized billing/account statement if applicable.
Be sure to use correct spelling and grammar – misspellings and improper sentences are often hallmarks of scam emails.

8) Easy Implementation

Email and text reminders shouldn’t be hard to add to your process. Many tools, like PDCflow’s FLOW Technology, can be up and running in as little as a day. If you shop wisely, you can find the right addition to your tech stack that will improve staff productivity and simplify the customer journey.

9) Builds Brand Credibility

Many businesses drag their feet on new initiatives for fear of day-to-day disruption. The problem is, longer your company waits to adapt, the further you’ll fall behind your competitors.

Customers put their faith in you when they agree to use your company. They believe you will do what you say and that account resolution won’t be needlessly difficult.

Internally, employees trust management to make smart, helpful decisions that create net gain for the company. They want faster, easier workflows, simplified training and automated options that take work out of their hands.

Delivering on your expectations is the mark of a good organization, and will naturally enhance your brand in both the short and long term.

Brand Building for Financial Services: An Interview With Phoebe Assenza, Brand Strategist

10) Reduces Collection Outsourcing

Payment reminders are not hard to implement. Consumers like them and employees want simpler ways to work. Sending notices keeps more accounts in good standing and eliminates a good portion of payments that would otherwise be paid late.

With those benefits, and fewer accounts ending up delinquent, companies may no longer need to use a third party debt collection agency to recover money owed.

Choosing the Right Payment Reminder Tool

Technology is a huge part of life. Selecting the right vendor partner that understands your struggles and has a customer centric approach to business can make payment reminders fast and easy – from set up, to training, to end-user experience.

PDCflow’s FLOW Technology is a secure, compliant, payment communication tool that can fulfill many essential business needs.

Through FLOW, you can:

  • Create automated payment reminders, along with a link to payment, making it as simple as possible to pay.

  • Take advantage of consumer preferences by sending email or text reminders to consumers.

  • Set a single payment for a future date along with an email or text reminder and payment link.

  • Pinpoint late or delinquent payments with customized reminder messaging and a payment link.

Need help getting started on your payment reminder notices? Download our Professional Payment Reminders and Templates guide for examples of the different types of payment reminders you can use and how FLOW Technology can help you achieve your accounts receivable goals.

Download the Professional Payment Reminders and Templates Guide
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- ABOUT THE AUTHOR -
Hannah Huerta - PDCflow Marketing Specialist
Hannah Huerta, Marketing Specialist

Hannah Huerta is a Marketing Specialist at PDCflow. She creates content for the accounts receivable and payment industry.

LinkedIn - Hannah Huerta

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