Reminder notifications

Mar 12, 2018
Brian O'Connor
The Basics

Another topic we are often asked about is around reminder notifications. The most common questions are typically the following three;

What is the ideal number of reminders I should send?

There is an economic principle called the law of diminishing returns which can loosely be defined as the point where the benefits gained is less than the effort or energy invested.  

This principle can easily be applied to the number of reminder notification as there is clearly a point where the notifications become less effective the greater the number you send.  Best practice and experience tells us that this point is around the 3 or 4 mark.  Any more that that and the reminders will become significantly less effective.  If a customer has ignored the first 5 or 6 reminders…..then chances are they will just as easily ignore the 7th or 8th.

When we built CreditCruncher we decided to take this best practice approach and limit the number of reminders to 4.  The first was an optional pre due reminder, and the other 3 were mandatory post due reminders.  Many experts agree that this is the optimal number of reminders to ensure the customer is given sufficient time and notice to settle their debt.

How often should we send our reminders?

The frequency of your reminders is also really important.  Although this will vary from company to company there are a couple of basic rules to follow.  

Firstly your pre due reminder.  Obviously this should be sent to your customer before their invoice becomes due for payment…..but how far in advance?  Ideally the reminder should be sent with enough notice that if there is an issue it can be highlighted and resolved in time to ensure the invoice is either paid on the due date or included in the next payment run.  With this in mind you should consider how long it would typically take you to resolve a common issue such as a pricing error or incorrect product shipped.  If this involves including your colleagues to help, then this could easily take at least a couple of days.  A good rule of thumb would be to allow at least 5 working days before the invoice is due.  This should be a more than adequate amount of time to resolve most of the common invoice issues.

Next your first reminder.  This can be tricky for some people as they do not want to seem too pushy with the first reminder just in case there is a genuine reason for the delay and an early reminder could be viewed as pushy by your customer.  Consequently a lot of companies will wait perhaps as long as 10 or 14 days before sending the first reminder.  

This is not ideal, the first reminder should be sent almost as soon as the debt is due, or at the very latest within a few days of the due date. Any longer and it gives your customer the impression that you have a relaxed approach to debt collection and they will react accordingly.  The correct approach is to be quick to remind your customer that the debt is outstanding and politely but firmly request immediate payment.

For your next two reminders, the timing will depend on what the maximum amount of time you are prepared to allow before referring the outstanding debt to a legal recovery service (or writing the debt off). So if you have a final cut off of say 60 days, then your third and final reminder should be at least 5 days prior to this.  This will allow the customer a small amount of time to respond prior to your passing the debt to your legal representatives for recovery.  Naturally your second reminder will be somewhere between your first and final reminder, exactly where will vary from company to company.

What should we say in our reminders?

How you phrase the wording of each of your reminders is important. Very often companies will want to incorporate their own personality into the tone and wording used in the reminders.  This is usually a great idea, it is after all an extension of your company and it should be consistent with all of your other communications in terms of tone, language, terminology etc.

It is also important to appreciate the message behind the reminder is also important.  The main goal of the reminder is to prompt your customer to pay their outstanding invoices.  With this is mind, as you progress through each of the reminders your tone should become more serious and direct.  

In terms of content, you should state the facts and set out the deadlines.  You should be specific in terms of dates and avoid generic terms like “in the next 5 days”.  Be clear on what your expectations are and finally spell out the consequences of non response and non payment.

So they are our top tips for getting the most out of your reminders. Let us know if you think we have left anything out.

photo credit: Marvin Ronsdorf on Unsplash

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