Dunning. Mention that word to anyone who owns the money, and you’ll give them the chills. Mention it to any business owner, and you’ll give them the chills.
According to the most common definition, dunning is a process of “making insistent demands for the payment of a debt.”
For an individual or a business that owns the money, it means being prosecuted by a business to pay a debt. For a business, it means hiring people or third parties with the purpose to collect the money it has the right to.
When dunning originated as a concept in the 17th century, it looked much different than it looks today. Back then, it was based on threats. Today, it is based on communication and gentle reminders that don’t have to progress to lawsuits. The most important thing to remember is that you have no right to harass or threaten anyone. You must make this experience as stress-free as possible for the people who owe you money.
A great company doesn’t stop there. It turns the process of dunning into a positive customer experience!
How is that possible, I hear you ask? First of all, let’s see why the process of dunning is so problematic. Then, we’ll go through some tips that will help you turn it into a positive experience for your customers.
Why Is Dunning Such a Big Issue?
It’s mostly because of the misunderstanding that occurs. When done the wrong way, dunning is a bad experience for both parties.
The business owner is convinced that the customer doesn’t want to pay and keeps avoiding the due invoice under any and all circumstances. The customer faces financial issues and feels pressured to pay. They believe that the business is greedy, has a rude approach, and is only after their money.
The positive outcome would be much different than that. The business owner would understand the customer’s financial issues and would help them pay the debt in the most painless manner. The customer, on the other hand, would understand their responsibility to cover the debt and would be open to a discussion towards a solution that both parties would benefit from.
How to Make Dunning Less of an Issue for Both Parties
1. Understand Your Debtor and Their Trouble
Some people don’t want to pay. They want to use the most they can from a business and benefit from it without taking any responsibility on their part. Yes; such customers do exist. The problem, however, is when you fit all debtors in that category. That pushes you towards a negative attitude, so you turn into a cold debt collector as soon as you realize that a customer is late with a payment.
Gary Smith, a financial advisor for ResumesPlanet, has one an important advice for all business owners:
Think twice before sending a cold email with the purpose to collect a debt. In the most common situations, people who owe money don’t even realize that their payment failed. They just need the information, and they will cover the payment ASAP. Others are in serious financial trouble. They want to pay; they just need some empathy and understanding. Together, you can work towards a solution.
First and foremost, you mustn’t assume that the customer is doing this on purpose. There are many reasons why you’re not getting paid, and they are not always tragic:
- Their card expired and they didn’t realize;
- There were issues with a payment gate;
- They forgot to update the CC info when they changed the card;
- The card lacked sufficient funds to cover the payment.
If the reason for a missed payment was any of the ones mentioned above, then your cold email will cost you a customer. They will never return to your business after making this payment. They will consider you’re harsh and money-oriented, and they will have every right to know that.
Try to understand why people miss payments. Some of them are not aware of that fact, and others have their reasons. In each case, you’re dealing with customers; not criminals.
2. Write a Proper Email
Let’s just quote Dale Carnegie, as the greatest authority in corporate training:
There are four ways, and only four ways, in which we have contact with the world. We are evaluated and classified by these four contacts: what we do, how we look, what we say, and how we say it.
What he was trying to say is that everything you do sends people a message. What you do, how you look, what you say, and how you say it determines the impressions people have about your business. If those impressions are negative, they will spread them around. A single email that lacks proper etiquette can be very damaging to your business.
Don’t worry; it’s not that hard to write a nice email message, even when you’re asking someone to pay you money. Just remember: you’re not requiring; you’re reminding!
- Clarify who you are and what purchase you’re referring to;
- State the amount of money that the customer owes, as well as the due date that was missed;
- Suggest a next payment attempt without any additional charges;
- Provide a link to payment options or invoice;
- List your contact information and invite the customer to ask any questions.
The email
Let’s try to formulate a nice email together, shall we?
We need your help!
We’re so happy you’re still using x.com. Unfortunately, we’ve been unable to process your latest payment. As of today, the outstanding balance is $12.
The card we have ends in xxxx. Could you please update your payment information so we can try again? You may do that on the following link: *link*
Contact support@x.com with any questions regarding your payment history at our website.
Best regards,
The x.com team
This seems like a nice email, doesn’t it? You’re not assuming that the customer tried to trick you. You simply assume there’s a problem with their payment information and you’re offering a quick fix. If they ignore you, you’ll send another email. You’ll explain that you’ll make two more attempts to charge with the current payment information. You’ll provide the dates of those attempts. Last by not least, you’ll also include a kind reminder that if those attempts don’t work, their subscription will end.
If it’s not about a subscription and they already got a product or service they have to pay for, you’ll remind them that missing the payment will lead to legal procedures with extra costs involved.
3. Keep It Simple, Short, and Clear
Explaining what benefits the customer got from your product or service and shaming them for not paying does not work.
Hey there!
Remember that TV you got and you love so much? Yeah; that one! The one that keeps you company every night when you feel alone.
Well, you didn’t finish paying for it! You’ve missed a payment and we don’t think that’s fair for all the support the TV is giving you.
If you don’t provide a payment, we’ll have to take this to court.
Fortunately, no business writes emails like that, but do take that example seriously. Many business owners try to be unique and funny when they start the dunning process, but that approach never works. Just be simple and straightforward! Explain what the issue is and how the customer can solve it.
Yes; it’s okay to remind the customer about the benefits they are getting from your business, but don’t turn it into an essay. Remember: this person is still paying for it, so you’re getting benefits from them as well.
Conclusion
No one likes requesting payments. When you take a positive approach towards dunning, however, you may show yourself as a graceful and patient business owner. Just be as nice as possible and keep in mind that you don’t want to lose the customer. You just want to help them solve a payment issue.
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- How to Turn Dunning Process into a Positive Customer Experience - August 22, 2018
