Never send more than two reminders

How many reminders should you send to remind customers of payment? Some companies send up to five reminders, but the effectiveness lies in limiting the number of reminders to two. But why?

From experience, it is evident that most responses come after the first and final reminders. Some customers only pay after being reminded, while others take action only with the last reminder, when costs and interest are at stake. Some companies seem to have a strategy to pay as late as possible, but does that mean you should go along with it?

1. Call only your key customers

Effective credit management includes not only reminders via email and letter but also telephone interventions. Although calling can be expensive and not always popular among employees, it can be very efficient. Telephone contact yields immediate responses, and a trained employee can quickly determine why a customer is not paying and tailor the collection strategy accordingly. The 80-20 rule, where 80% of the amounts are carried by 20% of the debtors, can help you focus on the key customers.

Tip! Always request a credit report and prevent defaulters.

2. Limit yourself to two reminders

Swift action is crucial in an effective debt collection process. Outstanding invoices should not go untreated. If you have made agreements with a debtor, act on them immediately. Quick follow-up is essential for the success of your collection. This shows that sending five reminders is unnecessary. Send only two letters: the first and the last. That is more than enough.

Customer had sufficient chances

With an invoice, telephone conversations, and two reminders, your customer has had enough chances to pay. Companies often do not charge costs and interest, resulting in high collection costs for you. Don’t be at the mercy of your customers any longer. Always outsource outstanding invoices within 90 days to an external party to maintain your credibility.

You can keep costs low by linking internal and external processes. The collection agency can build on the escalation integrated into your reminder process. This saves time and effort, and your collection partner can proceed with the escalation, such as involving a bailiff or lawyer.

What you need to know about your collection process

The highest escalation is going to court. Lawyers often want to cover themselves with registered letters, but this proves unnecessary in practice. A well-maintained CRM system with evidence of sufficient actions taken is sufficient. The combination of internal and external processes through your collection partner provides enough evidence for the court, without the need for registered letters.