NetSuite’s Advanced Dunning Management Strategies

NetSuite’s Advanced Dunning Management Strategies

Is your business struggling with overdue invoices and inconsistent cash flow? Are you spending countless hours chasing down late payments from customers? If this sounds all too familiar, it may be time to level up your accounts receivable game by implementing advanced dunning management strategies in NetSuite.

As a robust cloud ERP system, NetSuite provides powerful tools to streamline and automate the often tedious process of collecting on past due invoices, also known as dunning. By leveraging NetSuite’s advanced dunning capabilities, you can drastically reduce DSO (days sales outstanding), ensure steadier cash flow, and free up your accounting team from manual collection activities to focus on higher-value tasks.

In this post, we’ll dive into some of the most effective ways you can use NetSuite to optimize your dunning process and take control of your accounts receivable. From automated email cadences to streamlined payment capture to intelligent risk assessment, NetSuite has everything you need to become a collections rockstar. Let’s jump in.

Automate Your Dunning Cadence

One of the biggest challenges with dunning is staying on top of all the customer communications that need to happen on a regular basis. When done manually, it’s extremely time-consuming to keep track of which customers need to be contacted, when, and with what messaging. 

NetSuite solves this by allowing you to set up automated dunning cadences that will send email reminders to customers at predefined intervals. For example, you might configure a cadence to send a friendly reminder 5 days before an invoice due date, then a more firmly worded message if the invoice goes 7 days past due, an urgent request for payment at 14 days late, and ultimately a warning about service suspension or collections after 30 days.

With automated cadences, you can ensure a consistent flow of communications to all applicable customers without having to manually compose and send hundreds of emails each billing cycle. Simply define your messaging and timing, assign overdue invoices to the appropriate cadence, and let NetSuite handle the rest.

Of course, automated doesn’t mean impersonal. NetSuite allows you to personalize your dunning emails with customer-specific details by pulling information from the customer record and related transaction records. So each message can include the specific invoice numbers, amounts owed, payment links, and more – all populated dynamically. 

You can also set up different email templates for different stages of the dunning process, allowing you to strike the right tone as the situation escalates. For early stage messages, you may want to keep things light and friendly. But for later stage communications, it’s important to convey urgency and clearly explain the consequences of continued non-payment.

In addition to email, NetSuite also supports dunning cadences via printed mail and SMS text. You can set up rules to automatically change communication channels if a customer is unresponsive after a certain number of emails – ensuring you exhaust all options before the invoice goes to collections.

Use Segmentation & Conditional Dunning

While automation is incredibly powerful, not all customers can be treated exactly alike when it comes to collections. You may want to use different messaging, timing, or tactics based on customer size, strategic importance, invoice amount, location, or other factors.

NetSuite allows you to implement very granular segmentation so you can create different dunning tracks for different customer groups. You can define groups based on a wide variety of criteria and tailor your communication strategy accordingly.

For instance, you may want to give your largest enterprise customers with invoices over a certain amount more leeway before escalating to strongly worded dunning messages. Or perhaps you have a different process for overseas customers to account for time zone differences and international payment logistics.  

Using saved searches and custom fields on the customer record, you can dynamically route overdue invoices to the appropriate dunning track to ensure each customer gets an approach that makes sense for their profile, without requiring employee analysis or intervention.

You can also set up conditional dunning workflows that check for certain criteria and branch accordingly. As an example, let’s say you offer payment plans to certain customers on request. You could configure a workflow that automatically offers a payment plan if a customer’s overdue balance exceeds $1,000 and they haven’t had any other late payments in the last 6 months.

Or let’s say you have a segment of small business customers on monthly subscription plans. For those accounts, you may want to send an automated SMS reminder when a credit card payment fails, since immediate outreach is critical to avoid service disruption. The SMS can direct them to update their card information via a secure portal link.

NetSuite makes it incredibly easy to implement this kind of conditional logic in your dunning communications so you can adapt to customer situations in real-time. The result is a collections strategy that is more dynamic, nuanced, and customer-friendly.

Monitor Risk & Performance With Dunning Dashboards

NetSuite provides a wealth of data related to your accounts receivable and dunning activities. But data is only useful if it’s accessible and organized in a way that highlights key trends, red flags, and areas for improvement.

That’s where NetSuite’s configurable role-based dashboards come into play. AR managers and collectors can set up visual dashboards containing KPIs, charts, reports, and tasks specifically related to dunning performance. This provides an at-a-glance view of critical aging KPIs, customer risk factors, team productivity metrics and more.

Some key dunning metrics and visuals to include on your dashboard:

– Aging Overview: Summary of total AR, broken down by current, 1-30 days late, 31-60 days late, 61-90 days late and 90+ days overdue

– Aging Trend: Graphical trend lines showing DSO (Daily Sales Outstanding) and aging as a percentage of total AR over time 

– Risk Category Summary: Breakdown of number of invoices and total amount overdue by risk category (low, medium, high)

– Largest Overdue Accounts: Listing of the top 10-25 accounts by total overdue balance

– Promise to Pay Performance: For accounts where payment promises were made, percent that successfully paid vs no payment

– Collections Team Leaderboard: Side-by-side comparison of collector performance, e.g. # outbound activities, $ amount collected, # of accounts cured

– Automated Dunning Effectiveness: Comparison of dunning emails sent vs opened vs paid, by template/cadence stage

With NetSuite’s SuiteAnalytics capabilities, you can even set up alerts on your dashboards to notify you of dunning accounts that need special attention. For example, you could create an alert that identifies invoices over $10,000 that have progressed to 60 days overdue.

By tracking these metrics over time, you can see trends, identify problem accounts early, and continuously optimize your dunning approach. You can also use team performance data for training, rewards, and resource allocation.

Streamline Payments with the Customer Portal

One of the most effective ways to speed up collections is to make it as convenient as possible for customers to pay you. The more friction you can remove from the process, the higher your success rate will be in curing overdue invoices.

NetSuite facilitates this by providing a self-service online payment portal that allows customers to quickly view and pay their outstanding invoices. You can include links to the portal directly in your dunning emails and SMS messages, enabling customers to take immediate action.

Within the portal, you can enable a variety of electronic payment options such as credit card, ACH transfer and digital wallets. For each option, customers simply enter their payment details, select which invoices to pay, and submit. Payments are instantly captured and applied to the appropriate transactions in NetSuite.

The portal also allows customers to print a consolidated statement of all their open invoices. This is especially useful for customers who need to get additional internal approvals before remitting payment, as it provides a single view of everything that’s due.

For customers that frequently pay late, you can also enable an option in the portal for them to request a payment plan or extension. Customers fill out a simple online form, which routes to your team for approval and processing. This saves time by reducing back and forth phone/email communications.

The key is to provide an easy, self-service experience for customers to resolve overdue bills without needing to contact your staff. Instead of having to call in and provide payment info verbally, they can take care of everything electronically in just a few clicks. 

Automate Dunning for Subscriptions & Recurring Billing

For subscription businesses with recurring billing, staying on top of dunning is especially important to avoid involuntary churn. If a customer’s payment fails and is not promptly addressed, it can lead to an abrupt cancellation and loss of expected forward revenue.

NetSuite’s Advanced Revenue Management module provides purpose-built dunning for recurring billing scenarios. If a subscription payment fails due to a declined credit card or insufficient funds, the system will automatically send an email alert to the customer asking them to update their payment method.

If no action is taken, you can configure the system to follow up with a series of progressive dunning messages. For example, 3 days after the first failed payment you may send a reminder email. Then perhaps after 5 days you send a warning that the account will be suspended if payment is not made in the next 48 hours. If no payment is made after a week, you can trigger an automatic suspension and service lockout until the account is brought current.

You have complete control over the timing, channel, and content of subscription dunning messages. This allows you to tailor your approach for different subscription tiers, renewal terms, and customer segments. For instance, for your highest value enterprise subscribers you may want to include a phone call from their account manager as part of the escalation process.

With recurring billing, it’s also useful to track dunning trends over time to understand leading indicators of churn risk. NetSuite allows you to track subscription dunning metrics like:

– Number and percentage of credit card declines

– Average “past due” time before payment collection  

– Number/percentage of subscriptions suspended due to non-payment

– Dunning emails sent vs opened vs paid, by subscription cohort

By monitoring these metrics, you can take proactive steps to mitigate churn risk, such as implementing a backup payment method policy, communicating upcoming payment dates more clearly, or reaching out to at-risk subscribers before their next bill date arrives.

Extend Collections Capabilities With Integrations

While NetSuite provides a wealth of dunning functionality out of the box, you can extend its capabilities even further with third-party integrations. NetSuite’s open architecture and robust APIs allow you to easily connect with other collections-related applications and services.

Some examples of powerful collections integrations include:

– Collection Agency Partners: No one wants to send customers to outside collections, but sometimes it’s a necessary last resort. NetSuite can automatically identify severely delinquent invoices based on custom aging rules, and sync those accounts to your integrated agency partner. The agency can then report back collections activity and payments, which automatically reflect in NetSuite.

– AI-Based Collections Intelligence: Artificial intelligence can be a huge asset in collections by prescribing the most effective contact and treatment strategies for each customer based on payment history, company firmographics and even current economic conditions. AI-powered collections apps can integrate directly into NetSuite to intelligently prioritize your team’s activities and take automated actions like sending emails or recommendations for extending credit.

– Integrated Dialers: For accounts that require phone outreach, integrated dialer solutions can empower your reps to work more efficiently. With an integrated dialer, reps can place calls directly from the NetSuite dunning dashboard with one click. Call activity is automatically logged on the customer record, along with notes and follow-up tasks.

– Advanced Customer Payment Portals: If you have complex invoicing and payment needs, you may require a more feature-rich customer payment portal than what’s included natively in NetSuite. Luckily, leading payment portal providers have prebuilt connectors that allow their solutions to seamlessly exchange data with NetSuite. This gives you a customized branded portal experience with more advanced capabilities like automated payment reminders, integrated sales tax management, CAD/Check processing, and more.

– Outsourced Collections Services: For some businesses, it may make sense to outsource some or all of the collections function to a service agency. Outsourced collections providers integrate with NetSuite via API to automatically pull in new overdue invoices, take dunning actions on your behalf, and log all activity back to the customer record. This can be a good option if you have a very small internal team or want to benchmark your in-house collections performance.

The great thing about SuiteCloud integrations is that they are typically plug-and-play, requiring minimal IT support. Once your credentials are set up, data can flow seamlessly between NetSuite and external dunning applications, so all your collections activities are unified in one central system. 

Implementing a World-Class Dunning Strategy

As you can see, NetSuite provides extremely robust functionality for leveling up your dunning processes. By using the best practices we’ve covered in this guide, you can create a collections operation that is far more efficient, effective and profitable.

Some key things to keep in mind as you implement a new dunning approach in NetSuite:

Customize your communication templates carefully. Strike the right balance between firmness and empathy in your tone. Always include a clear call to action, due date, and instructions for how the customer can easily pay.

Leverage segmentation to tailor your dunning strategies. Don’t apply a one-size-fits-all approach; use NetSuite’s custom fields and conditional logic to trigger different treatments based on unique customer characteristics and situations.

Make it easy to get paid. Enable a variety of self-service electronic payment options, and make sure customers can access them instantly from your dunning messages. Prominently display the payment portal link in emails and SMS. 

Monitor and measure everything. Use NetSuite’s customizable dunning reports and KPI dashboards religiously. Keep a pulse on DSO, high risk accounts, common dispute reasons, promise to pay trends, and team performance. Use this data to continually optimize your approach over time.

Automate wherever possible. NetSuite can handle the lion’s share of collections activity without human intervention – use that to your advantage. Set up comprehensive multi-channel cadences, and let the system do the heavy lifting while your team focuses on high-value activities. 

Extend with best-of-breed integrations. You don’t have to limit yourself to NetSuite’s native capabilities – if there are niche collections tools that can drive extra efficiency for your team, by all means integrate them. Just make sure the systems can bi-directionally sync so your NetSuite environment remains the single source of truth.

Train your team thoroughly. Make sure collectors understand not just the technical steps to execute your dunning strategy, but also the principles and business goals behind it. Dunning is equal parts art and science – coach your team on the soft skills like objection handling, emotional intelligence, and customer service.

With focus and consistency, the tips outlined in this guide can help you completely transform your collections function. You’ll elevate it from a reactive, manual process to a strategic, data-driven initiative that delivers real bottom-line results.

Need help implementing a 5-star NetSuite dunning strategy? Our SuiteCloud-certified consultants can review your current workflows and design an optimized collections approach that aligns with your unique business needs. Contact us today to learn more.