A successful collections strategy is about responding effectively to payment behaviour and sending one email after another isn’t likely to increase the chances of improving payments.
An effective B2B payment reminder strategy will consider timing, segmentation, escalation, communication and how to measure success. Often, teams will automate their reminders because they provide consistency and reduce admin pressure but when automation replaces judgement, businesses risk treating every overdue account the same way.
Now’s the time to see if your strategy is effective or just adding to the noise.
1. Timing matters more than frequency
Your timing with your customers needs to be intentional. Some customers only need a reminder shortly before an invoice is due but others need to be contacted immediately by telephone.
You also need to think about your customers’ payment processes. If a customer only processes supplier payments at specific points in the month, then sending lots of reminders between payment runs is likely to achieve more or less nothing.
- What you should do differently with your B2B payment reminder strategy
Find out when invoices are approved, processed and paid – this allows finance teams to make contact at the moments that matter.
2. Segmentation
Not all overdue accounts have the same level of risk, so it’s important to recognise the differences and adjust communication accordingly.
It might be that you have a reliable customer who pays five days late for the first time and a customer who nearly always misses agreed payment dates. It’s clear that they shouldn’t be treated the same and with the same automated reminder.
- What you should do differently with your B2B payment reminder strategy
Review your overdue ledger and group customers by their payment behaviour. Separate them into normally reliable, habitually late payers, high-risk or unresponsive. Highlight the values, days overdue and previous payment commitments to then influence your prioritisation.
Having these groups defined will show your team where their attention will provide the greatest improvements.
3. Escalation
While it’s tempting to keep on chasing, escalation works best when it’s driven by the reason a payment hasn’t been made.
An invoice might be unpaid because there’s a missing purchase order, a query sitting with the wrong person or there’s a dispute. Another reminder isn’t going to fix any of these problems, so once you know the reason as to why a payment’s being held, you’ll know whether or not it requires escalation as well as who you need to speak to and what you need to resolve it.
- What you should do differently with your B2B payment reminder strategy
Before sending an email, review the account and identify what information is missing.
4. Communication
A customer hasn’t responded to three emails, which means another one isn’t going to change anything. The way you communicate should change when an account becomes further into overdue – this means changing the communication channel and who makes the contact.
Emails are easy to ignore but a phone call isn’t and it gets you to the answer much more quickly. A proactive approach is having a real conversation which will show the overdue balance is being taken seriously.
- What you should do differently with your B2B payment reminder strategy
If your emails aren’t being responded to, you need to have a telephone conversation. It’s appropriate to involve a senior credit controller rather than rely on an automated message.
5. Measuring success
You might be sending a lot of emails but that doesn’t mean you’re demonstrating effective management. The question you need to ask yourself is: are the current communications recovering outstanding balances?
If your emails aren’t making a difference, your strategy needs to change.
- What you should do differently with your B2B payment reminder strategy
Measure what’s happening after the emails go out. You can do this by seeing how many overdue invoices are paid following a reminder. How often are agreed payment dates honoured. How long does it take to resolve an overdue account. Which customer group requires follow-ups. And whether DSO is improving.
Use collection results to show what’s not working and adjust your strategy. If customers often miss promised payment dates, focus on following up commitments or escalating sooner, rather than sending more reminders.
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