You want to set up an effective and adapted dunning process and you do not know what to choose between written reminder and telephone dunning?
Let us have a look at the advantages and drawbacks of these two types of reminders to determine which one is the most suitable for optimizing your debt recovery.
Why the preference for a phone dunning ?
The main benefit of phone dunning is that it immediately establishes a dialogue with the customer who will feel more confident and thus be more cooperative. This is an opportunity to clarify any area of disagreement and reassure the customer to preserve your business relationships. The phone call helps to streamline exchanges and quickly resolve unpaid debts or disputes.
The phone call is particularly preferred for 3 types of customers:
- Key customers (major revenue contributors, business partners, sensitive customers, etc.): must be reminded by telephone in order to maintain good business relations.
- Corporates and public bodies whose invoice processing circuit can be long and tedious: picking up your phone will allow you to identify the right person and to understand your client’s invoice processing procedure.
- “At-risk” customers whose late payments are related to financial difficulties: it is important to keep in touch with these customers to ensure that your invoices are paid in priority and to anticipate any risk of late payment.
What are the disadvantages of phone dunning?
A successful phone dunning requires a qualified database that allows you to reach the right person.
Phone dunning is on average 10 times more expensive than a written reminder. A phone reminder costs on average between 10 and 15 €. It requires a phase of preparation of the files which can be time-consuming but which is necessary to ensure your credibility with your interlocutor. If he feels that you are aware of the complexities of his file, he will be more inclined to dialogue. It is therefore necessary to take the time to get to know your client’s file in order to carry out an effective phone call.
Finally, to be effective, the phone dunning must be entrusted to employees who are qualified and trained in commercial negotiation.
What are the benefits of the written reminders?
The written reminder is inexpensive and can be automated which allows to reach a large number of customers in a very short time especially through the use of a client management software. It can be done by simple mail or by registered letter with acknowledgment of receipt, by e-mail or by SMS.
Particularly suitable for “low-risk” clients it can serve as a reminder for customers who have forgotten to pay their bills without cataloging them as bad payers.
The written reminders are also very useful in the pre-chasing phase (reminder of a future payment deadline).
Finally, the written reminder allows you to keep written evidence in case of legal action.
However, a written reminder also has drawbacks:
The effectiveness of written reminders is often challenged because the client may not feel compelled to respond to the reminder and process the request.
Moreover, by dint of receiving dunning letters and e-mails the customer can get tired and simply ignore them thus diminishing the impact that can have your actions.
In conclusion, an expensive and time-consuming solution, phone dunning is most effective but cannot be systematized especially when a large volume of unpaid invoices must be managed. Thus, it is important to put in place scenarios consisting of written and telephone reminders of increasing impacts on the customers, following a gradual and proportioned sequence to increase the credibility of your approach, until the formal notice by registered letter with acknowledgment of receipt if necessary.
Depending on the different types of clients in your portfolio (significant accounts, public bodies, risky / non-risky clients …), several scenarios may be set up with a combination of written and telephone reminders adapted to each typology. In any case, establish dialogue through calls but still keep written records in case of dispute!