Dunning Management System

Overview, Importance and Tricks for Dunning Management System


What Is Dunning?

Dunning management is the capability of a recurring billing system to deal with the complications that arise from declines in credit card payments. If the billing software discovers a decline in credit on one of the accounts, it’ll notify the customer, informing them that the charge was not successful.

Based on the billing system you use, the charge can be repeated following a predetermined number of days before the customer’s account is frozen. Billing management is essential, particularly if you anticipate or have an extensive user base.

The Importance of Dunning Management for Your SaaS Business

  • Software for dunning remains automatically operated.

There isn’t anything to get back the failed payment. The software that manages your dunning is working in the background to make sure that you recover unsuccessful payments without disrupting your routine.

  • The Dunning management software will contact your customers before a failure in payment.

A dunning management system is constantly looking for payment issues that could cause concern. One of the most frequent reasons for involuntary or passive churns is a credit card.

This is how it works. The majority of credit cards come with a three-year expiration time. About 3 percent of credit cards expire each month, while 36 percent expire annually. A majority of your customers will utilize a credit card to purchase subscriptions. This means that at any time, a desirable proportion of your customers could be unable to pay due to a payment issue.

The software you use for dunning can automatically contact clients who have credit cards about to expire and request that they update their details.

It could reduce the likelihood of abandonment as well.

Do you have issues with customers who begin to change their billing details but stop halfway through? It happens, and people get distracted. But your dunning program can guide users towards the page for payment using a series of abandoned emails. This is done automatically without taking time from your schedule to write and send these emails.

Software to manage dunning can save time.

It is crucial to immediately address any payment problems (or imminent payments failing). If you don’t do this, you’ll face an uneasy choice: either suspend your customers’ access to your service or let your customers access your service and accrue more debt.

  • The other two options aren’t best for your company.

The first one can be a source of confusion and frustration for your customers, mainly when they aren’t aware of the issue initially. This can create an unflattering impression of your company. While the problem could have been an accident, they can end the subscription.

The other option could harm your business. Your customers can’t access your services without having to pay. If you get a payment in place and receive compensation for the amount that has remains accumulated could create tension. Nobody wants to see an unexpected and massive charge on their credit statement.

When a credit card transaction has been unsuccessful or is near, the dunning software will start working immediately. It will speed up the process and ensure you can resolve the issue quickly and not linger for months.

Tricks to Dunning on Subscription Service Companies

1. Be proactive:

If possible, don’t delay until a credit card is beyond due to contact a client. If the credit card has remains canceled because of theft or fraud, the possibility of this happening isn’t; however, it’s still a good idea to send some emails to customers who have a credit card that is due to expire soon.

This procedure (known by the name of “pre-dunning emails”) could remains manually performed or automated (we would recommend using an automated one); however, the most crucial aspect is to reduce the chance of accounts becoming late at all.

A red flag will be raised if the customer’s account is overdue, and the smart dunning managment process must start. Dunning emails remains most effective when they’re punctual, regular (they should be sent each three to five days until payment remains received or a specific deadline is completed) and also personal.

Your emails reflect the personality and image of your business and your customers’ tastes.

2. Utilize more than one medium.

It’s a shame that emails that make an apparent reference to credit card numbers remains usually blocked as spam by the filters in the smart dunning process. This is why it’s a great idea to incorporate calls, SMS messages or even direct mail into your dunning management software.

3. Grace Period

Provide a grace period many times customers may not even be aware that their card has remains declined. Allow them to fix the issue before having to close your account. Many experts recommend the range around 21 calendar days between the date of the initial failed payment to the date that the account remains closed.

In the end, it’s all up to you. It is entirely up to you depending on your personal preference and services. As a matter of course, you should give your customers who are in debt a chance to remind them that they owe you a debt using the suggestions in the previous paragraphs.

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