Invoices issued but unpaid. For most businesses, this scenario inevitably occurs despite best efforts to ensure timely customer payments. While occasional delays may be understandable, chronic late payments or non-payments can significantly impact cash flow and financial performance.
This is where dunning letters come in. A dunning letter is a type of correspondence used to notify and remind customers of overdue payments. Implementing dunning letter procedures is an essential collections process in NetSuite to help recover unpaid invoices and improve cash flow.
What Are Dunning Letters?
Dunning letters serve as polite but firm reminders and requests for payment on overdue customer accounts. The term “dunning” originates from the Middle English word “dunnen” meaning “to demand payment.”
Typically, a series of escalating dunning letters are sent out in intervals after an invoice due date has passed. For example:
1st Dunning Letter: Sent 7 days after due date
2nd Dunning Letter: Sent 14 days after due date
3rd Dunning Letter: Sent 21 days after due date
Final Dunning Letter: Sent 28 days after due date
If the final dunning letter does not prompt payment, the next course of action may involve handing accounts over to collections or pursing legal action. Structuring dunning letter procedures in this incremental fashion allows customers multiple reminders before reaching these extremes.
Benefits of Sending Dunning Letters
When implemented effectively, dunning letters provide many financial and operational advantages such as:
- Improved Cash Flow: With consistent dunning efforts, businesses speed up collections on unpaid invoices to improve cash flow critical to daily operations and growth plans.
- Prevents Write-Offs: Writing off uncollectible invoices directly hurts the bottom line. Dunning systems help avoid write-offs through active invoice chasing.
- Enhanced Relationships: Repeated non-payments strain vendor-client relationships. Dunning letters open payment communication channels to foster transparency and accountability.
- Better Forecasting: By accelerating late payments, businesses can more accurately forecast upcoming cash flow and make informed decisions.
- Reduced Churn: Getting customers to pay owed amounts promptly decreases likelihood of losing their business to competitors through churn.
Best Practices for Dunning Letters
When introducing dunning procedures, keep these best practices in mind:
- Personalize: While templates allow efficient mass letter creation, personalizing each communication with customer details builds rapport.
- Remain Professional: Dunning letters should avoid aggressive language and maintain a tactful, courteous tone.
- Start Right Away: Send the first dunning letter immediately after an invoice hits its due date to initiate immediate collections momentum.
- Note Terms: Politely note agreed upon payment terms or policies that account is currently violating without accusations.
- State Actions: Directly but respectfully state the actions needed, i.e. submit payment by X date or contact accounting staff.
- Exclude Interest: Wait until the last dunning letter to introduce any interest or penalties that may be imposed to motivate payment.
- Accept Payment Plans: If cash flow issues underlie late payments, offer reasonable installment payment plans.
- Use All Channels: Send dunning letters through every communication channel – physical mail, email, SMS text, and phone.
Automating Dunning Letters in NetSuite
Manually drafting and sending customized dunning letters is extremely time consuming. Luckily, NetSuite provides built-in automation features that help streamline this critical collections process.
1. Dunning Letter Templates
Pre-built dunning letter templates allow users to quickly generate letters with proper formatting and basic texts. Default templates contain placeholder fields to pull in relevant data such as customer name, invoice number, date, amount due etc. Users can fully customize letter appearance, add logos, insert additional dynamic fields, include incentives, and tailor messaging language.
2. Dynamic Due Dates
By linking dunning letter triggering to invoice due dates, letters automatically queue to send on the precise dates they need to according to pre-defined business rules – no manual oversight required. As due dates change, so do the associated dunning triggers.
3. Automated Generation & Delivery
Once templates are set up, users pre-determine send intervals for each letter, such as sending Letter 1 seven days after due date and Letter 2 fourteen days after due date. NetSuite then automatically generates each subsequent letter and sends via the preferred communication channel – email, physical mail, SMS.
4. Dunning Dashboard Tracking
Comprehensive dashboards allow efficient monitoring of all dunning activity. Users can view real-time status of letters in queue, letters successfully sent, associated invoices, amounts due, days overdue, customer responses, and payments received. This level of tracking helps measure effectiveness and quickly identify any issues needing intervention.
Why Choose Anchor Group for NetSuite Implementation?
As a NetSuite partner, Anchor Group offers complete NetSuite implementation and support services that equip growing businesses to get the most value from their system investment.
Specific to dunning procedures, our team brings extensive expertise to ensure smooth configuration, customization, integration, and adoption.
Hands-On Config & Testing
Our consultants thoroughly guide users through built-in dunning functionality while tailoring setup to unique workflows. We test configurations extensively before go-live to guarantee seamless automation.
Custom Letter & Template Building
Based on the nuances of your collections process, we construct customized dunning templates and workflows down to the field level in NetSuite to match your ideal scenarios.
SuiteApps Integration
To amplify collections efforts, we integrate advanced dunning SuiteApps into your ecosystem for added template flexibility, multi-channel delivery, analytics, and more.
Staff Training & Adoption
Through training workshops and support docs, we ensure your staff understands dunning procedures and leverages automation to eliminate inefficiencies while aligning with business objectives.
Ongoing Support & Optimization
Post launch, our advisors continually evaluate dunning performance, identify areas for refinement, implement optimizations, and provide support resources as needs evolve.
Let our NetSuite collections experts tailor dunning automation to your unique financial environment and business needs. Anchor Group has guided over 1,200 implementations, earning an impressive 97% retention rate in the process. Contact our team today to discuss how activating NetSuite dunning letters can help recover revenue, improve cash flow, and ensure long-term growth.
