When a business grows, managing billing, customer subscriptions and other operations become challenging. The main challenge for most subscription-based enterprises is finding a way to recover lost revenue. Having a B2B cash flow management system can help the business make collections. However, sometimes there are failed or delayed payments. Therefore you need automated dunning for your business to help protect it against churn because of delayed or failed payments. Various collection management software, such as KredX’s CMS, can help in cash flow management. This article explores what dunning is, the benefits of automated dunning for business and how it can help businesses retain clients.
What is an Automated Dunning for Business?
Automated dunning for business is a process that involves the collection of payments from clients. The term dunning comes from the verb “dun”, which means “to demand payment of a debt. It is an automated B2B cash flow management system that helps businesses recover payments. Most people refer to dunning as collections or accounts receivables.
Instead of just demanding money, an automated dunning management system may give clients a significantly better experience. A dunning solution enables you to collaborate with consumers to address payment concerns using automated emails, SMS, in-app notifications, and paywalls. In addition, businesses can program their B2B payment automation software to offer personalised and customised payment updates on due dates.
How Automated Dunning Helps Recover Delayed/Failed Payments
Sometimes payments fail for different reasons, even when you have a B2B cash flow management system. Things that can lead to failed payments include card expiry, card authorization failure, lost card, processing errors and outdated card information. Automated dunning for business helps address these issues and payment failures through a two-step approach.
Payment retry: The B2B payment automation software will notify the client of the payment failure. It then retries the rejected card to try and recover the payment within the set time. The number of retries will vary depending on your B2B cash flow management system. However, the recommended retries are three with a frequency of 3-5 days.
Pre-dunning: This approach notifies clients beforehand about the expiry of their card. As a result, they are advised to update their new credit card details ahead of the due date for collection.
Benefits of Automated Dunning For Business
1. Reduces Customer Churn
Customer churn is among the key metrics that subscription businesses should track. It happens following the cancellation of a subscription because of a failed payment. Mostly it happens when a customer fails to renew their card or doesn’t have enough balance. Unintentional customer churn can affect cash flow alongside brand value. This is where automated dunning for business becomes crucial. Dunning notifications and emails can considerably reduce churn by notifying customers to update payment information to avoid subscription cancellation.
2. Minimise Recurring Revenue Loss
Another challenge businesses face that requires automated dunning cash management is the loss of recurring revenue. Most businesses concentrate on improving monthly recurring revenue, but sometimes some revenue is lost. These small amounts might, over time, accumulate and limit growth. Subscriptions should be seamless, but sometimes payments can fail or delay. B2B automated dunning for businesses can help businesses recover a lot of revenue and minimise MRR loss.
3. Avoiding Failed Payment
B2B payment automation software is important in the dunning process as it helps businesses simplify cash management trends. For example, you can schedule pre-dunning notifications for clients to remind them to update their cards rather than waiting for a transaction to decline. Automated dunning cash management notifies subscribers early so that they can update their cards before expiry. This way, you ensure that you maximise collections and minimise failed payments.
4. The Automated Dunning Process Frees Up Resources
Automation of the dunning process can make the customer support team work efficiently. Your support team will spend less time sending dunning emails or manually addressing payment issues. In addition, since you will add a layer of security that prevents subscription interruptions, implementing a B2B automated dunning for business system can enhance your customer’s experience. Therefore, you don’t have to contact clients to address subscription issues.
5. Boost Customer Engagement
It can be challenging for large businesses to scale client interactions effectively. Therefore having more customer touch points through automated dunning for business help create stronger relations and enhance customer retention. An effective B2B automated dunning for business can promote positive client experiences. The trick is sending helpful emails instead of overwhelming clients with unhelpful emails they will not read. Personalised dunning emails can demonstrate that you are ready to resolve their issues.
If you run a subscription-based business B2B automated dunning for business systems is very crucial. In addition to automated dunning software, you need an integrated cash management system to manage your AR and AP. Payments automation, alongside other strategic policies, can significantly help reduce client churn and improve collections.
If you are searching for a cash management automation system consider Kredx’s Cash Management Solutions (CMS).