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Level 4

Does Automated Payment Reminder email workflows work ?

B2B payments, unlike B2C payments, usually happens on credit. Accepting Credit payments usually leads to delayed payments and have associated risks of non-payment. Businesses accepting credit payments will also have to deal with the additional overhead of manual follow-ups through various means.

 

Hence, having an automated email workflow system to follow up customers for soon-to-be-due invoices or overdue invoices will significantly help reduce overheads and delinquency rates.

 

To come up with a customized email workflow, initially, the business should come up with various segments based on (customer, invoice amount etc, invoice due days, overdue by days etc).

 

The business can either have a single email workflow for all its customers or can choose to have separate workflows for each of the segments.

 

The segments, for example, could be as follows

  

  1. Customers with invoice amount less than 1000 USD
  2. Customers with invoice amount between 1000 to 10,000 USD
  3. Customers with invoice amount greater than 10,000 USD
  4. Customers X, Y, Z (long-running customers )
  5. Customers with Invoices overdue by more than 60 days

 

After defining the segmentation you would need to come up with the workflow for each of the segments

 

On a paper first, draw a timeline with days before and after the invoice due date for each of the segments with the message text that needs to be sent in the email.

Email workflow.png

 

 

 

 

Advantages of having such an automated email workflow are as below

 

  1. DSO improvements
  2. Savings from reduction of manual effort involved in follow-ups
  3. Better customer relationships as automated reminders are considered gentle reminders

 

 

 

Do Automated Reminders work? Research shows they do!

 

Poverty Action Lab -  REMINDERS VS. FINANCIAL INCENTIVES FOR LOAN PAYMENTS

 

 

The research (link above) talks about a field experiment done with microlenders in Uganda to test the effectiveness of financial incentives vis-a-vis payment reminders.It was found that simple payment reminders were as effective as financial incentives in ensuring timely loan repayment.

 

To put this in numbers, Timely and regular SMS messages ( which costs almost nothing ) were as effective as 25% reduction in the monthly interest rates (provided as an incentive on timely payments) in ensuring timely loan repayments.

 

 

 

Questions to the QuickBooks Community 

 

1) Have you felt the need of setting up such an automated reminder workflow?

2) Do you feel that having such an automated mechanism could improve your chances of getting paid on time

3) Have you used such a system and seen improvements if any?

 

(please comment below)

 

 

- Megan for PayorCRM

PayorCRM is an automated receivable management system that automates most of the Collection related tasks including invoice reminders and automated debits

 

 

3 Comments
Highlighted
Level 7

Does Automated Payment Reminder email workflows work ?

Great article! In addition to streamlining the payment process, automating invoices and reminder emails also helps clients know what to expect from you and when. Sometimes a gentle early reminder is all that's required to ensure on-time payment.

Highlighted
Level 4

Does Automated Payment Reminder email workflows work ?

Exactly Emily

 

It's also a gread idea to add marketing messages within these automated reminders too .Payment reminder mails surprisingly has higher open rates compared to cold emails !

 

What better way to tell your customers about your new product or discount sales than adding a small banner at the end of your payment reminder email!

Highlighted
Level 2

Does Automated Payment Reminder email workflows work ?

Love the emails.  Unfortunately, they use the company email instead of the customer-facing email as the Reply To address.  This means that customers email me, the company owner, instead of the office manager.  There is no way to change the email used.

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