Every business has to chase overdue invoices at some point. For most businesses with a sizable customer base, it’s a regular occurrence that sucks up staff time, and all for something that doesn’t even feel necessary a lot of the time.
Automating your dunning process can take the hassle out of overdue payments, but not all businesses know how to do it. Or even what the massive benefits are.
Even many seasoned NetSuite users don’t realise how much of the process can be managed by NetSuite. But, as trusted NetSuite partners, we do, so we’ve put together this post to talk you through it.
We’ll explain which parts of the dunning process can be handled in NetSuite, the benefits it will bring and even how to do it. So, if you want to know about setting up an effective automated dunning process in NetSuite, read on!
Dunning is the process by which businesses contact their customers to chase overdue invoices. In NetSuite, this process can be automated to make it less labour-intensive for your team.
Traditionally, dunning was slow and clunky. Even though ERPs and other systems have found ways to automate part of the process, an high level of human oversight was still needed throughout to avoid errors.
Now, NetSuite lets you almost fully automate your dunning processes. All it needs is for you to create rules and workflows for it to follow, and from these, it can identify outstanding invoices and trigger emails to chase payments.
It doesn’t have to be a one-step process either. With NetSuite you can set up a staged dunning procedure, with tailored communications for each stage.
For example:
As we mentioned above, traditional dunning processes can be time-consuming. Automating them speeds up your Accounts Receivable process, because your team is no longer dragged into manual follow-ups. Instead, you can create a consistent collections workflow and strategy that will scale alongside your business.
Here are some of the specific benefits your business can enjoy:
Sometimes customers miss your invoices or genuinely forget to pay them. The quicker they receive their reminder, the quicker they can rectify this. An automated dunning process will get a communication to them quicker, rather than waiting for a member of your team to go through accounts or notices to find it.
No matter the size of your business, late payments can put you under pressure. Maybe you need the money as soon as possible, or maybe you need to meet deadlines for month-end close or quarterly reporting. Whatever the case, you want to keep the cash coming in.
With automated dunning, payments are chased up more quickly and paid more quickly, and you can better handle your cash flow because you’re not left waiting for invoices or balances to be updated.
Manual collections are a complex process. You need to check reports or records to identify unpaid invoices, create an email to chase the payment and then track the response. And if a response is not received, the cycle continues.
By using NetSuite to automate this process, your finance team is freed from these repetitive tasks. Instead of poring over paperwork or writing out responses, they can focus on higher-value work that can’t be automated, without affecting your ability to chase payments.
With automated reminders, every customer gets the correct message at the right time. With consistent, relevant communications, they won’t lose track of what’s going on, and your business will deliver the most professional experience possible. It also won’t leave customers feeling like they are being unfairly or unnecessarily chased, as all your customers are treated the same.
Eventually, even automated dunning processes stop being sufficient. Sometimes, if an invoice is left outstanding, then your team will need to make direct contact or escalate the issue further. But even this part of the process is eased by automation in NetSuite, as the ERP can take care of everything up to that stage and also highlight exactly how overdue balances are and how far a customer is along in the collections process.
That lets your team prioritise who they chase up and use their time better by not getting involved until absolutely necessary. It also makes them less likely to miss someone who does need chasing.
DSO measures how long it takes a business to collect payment after a sale. By sending timely reminders and following a structured process, businesses can often reduce DSO and improve overall financial performance.
For small businesses, manual invoicing can feel like an easier process. It might even be preferable if you feel it gives you greater control over when automations are chased, particularly if you know your customers well and worry about their circumstances.
But as businesses grow, so does the number of customer accounts they have and the number of invoices that are sent. And, unfortunately, the number of invoices that are left unpaid. Managing them all manually will go from slow, to difficult, to almost impossible – and even trying will leave you missing out on accounts that need to be chased.
With automated dunning through NetSuite, the process works the same for small businesses to multinationals; it simply scales up with you.
The first step is planning your process based on how often you want communications to be sent out. For example, are the first emails sent a day after missed payment, a week or a month? What intervals will you want them to send after this?
Even if you already have a dunning process, you can take this opportunity to revisit and refine. By automating it, you can send out more invoices with less effort, which might free you to implement more stages or make them more frequent.
The second step in automating your dunning process is to create templates for the emails and communications that are sent through. You should create a template that is easily identifiable as different for each stage, as this will lessen the chance of people thinking an email is a repeat and disregarding it.
Make sure the wording of your templates is clear, polite and covers all the information needed.
This is the first step you take in NetSuite. It’s what tells NetSuite when to send out the automated communications, based on the DUE DATE field in the record.
To create a rule, go to Dunning > Setup > Dunning Level Rule > New.
Fill in the fields that you see, which are all pretty self-explanatory (such as Days Overdue, which sets when the communications should be sent out, or Minimum Transaction Amount, which is the minimum invoice amount that should trigger a communication. If you need more support with setting up your dunning rule, please check the NetSuite support pages or speak to your NetSuite partner.
This is a multi-step process in itself.
Setting up automated dunning is a relatively simple process, but there are ways to make it as effective as possible. Keep these best practices in mind during set-up:
If customers usually pay on time, without prompting, then they don’t need as rigorous a process as those who always pay late. Group your customers based on the risk they pose, previous payment behaviour or account value to ensure the most effective dunning procedure possible.
A single reminder is rarely enough to trigger a payment from customers who let invoices go overdue. Set a process with several stages, such as an early reminder with a friendly tone a few days after, a slightly stricter reminder after two weeks, a formal notice after a month, then an escalation beyond that.
This gives customers multiple chances to pay without your team having to get actively involved.
A clearly generic template is less likely to get a response, as customers can tell it’s automated, and they may feel it’s less ‘serious’. Use details like names, invoice specifics or account information in the email instead, to make it feel more personalised.
Customer behaviour changes over time. Sometimes, businesses that previously paid promptly start to slip, getting later and later with payments until they are chronically overdue.
Regularly reviewing and updating your dunning procedures means you can make adjustments for customer behaviour changes or your own business goals. You can adjust your timing, messaging, or escalation processes to ensure collections are handled as seamlessly as possible.
The goal of dunning is to collect payment while maintaining positive customer relationships. Communications should be clear, professional, and helpful.
A balanced approach can improve payment performance without damaging customer trust.
As beneficial as automating dunning via NetSuite can be, a lot of our customers reported that its functionality is not extensive enough. This is why we created TaskCollect.
This NetSuite SuiteApp, built by our own certified NetSuite developers, uses AI to streamline the process even further. From automating workflows to generating personalised dunning letters to analysing historical payment records to predict future missed payments, it makes the process even quicker and more effective. It can even help you assess customer risk through integration with credit agencies.
If you’d like to learn about TaskCollect and the role it can play in further streamlining your dunning process, talk to our team today to arrange a demonstration.
If you’d like to learn about TaskCollect and the role it can play in further streamlining your dunning process, talk to our team today to arrange a demonstration.
