Overdue Invoice Collections

Automated dunning and collections process for overdue invoices, escalating from friendly reminders to legal action

Flow

Overdue Invoice Collections Flow

This flow documents the automated dunning process for overdue invoices, from gentle reminders to escalated collections and potential legal action.

Flow Overview

The collections flow balances revenue recovery with customer relationship management. It uses progressive escalation to maximize payment recovery while minimizing customer churn.

Dunning Schedule

Standard Customer Path

Days OverdueActionToneWait Period
1-7First ReminderFriendly7 days
8-14Second NoticeUrgent7 days
15-29Final NoticeFirm14 days
30-44Pre-CollectionsSevere14 days
45+Collections/LegalFormal-

VIP Customer Path

  • Personal outreach from account manager
  • More flexible payment terms
  • Extended grace periods
  • Focus on relationship preservation

High-Risk Customer Path

  • Immediate service suspension
  • Accelerated escalation
  • Earlier collections involvement
  • Stricter payment terms

Customer Segmentation

VIP Customers

  • Annual revenue > $100K
  • Excellent payment history
  • Strategic accounts
  • Personal handling

Standard Customers

  • Standard dunning automation
  • Balanced approach
  • Relationship maintained

High-Risk Customers

  • Poor payment history
  • Multiple past-due invoices
  • Previous collections cases
  • Immediate protective measures

Collection Methods

Automated Communications

  • Email reminders (primary)
  • SMS notifications (optional)
  • Customer portal notices
  • Scheduled automatically

Personal Outreach

  • Phone calls (15+ days overdue)
  • Account manager involvement (VIP)
  • Payment plan negotiations
  • Documented in CRM

External Collections

  • Third-party agency (45+ days)
  • Legal proceedings (90+ days, high value)
  • Credit bureau reporting (optional)
  • Last resort measures

Payment Plan Options

Offered when:

  • Customer demonstrates willingness to pay
  • Temporary financial hardship
  • Preservable customer relationship
  • Amount justifies effort

Terms:

  • 2-6 month installments
  • May include interest or fees
  • Closely monitored
  • Default triggers immediate escalation

Business Rules

Service Suspension

  • Triggered for high-risk customers
  • 30+ days overdue (standard customers)
  • Can be reversed upon payment
  • Documented in customer account

Collections Escalation

  • Minimum threshold: $500
  • 45+ days overdue
  • Failed payment plans
  • Cost-benefit analyzed
  • Minimum amount: $5,000
  • 90+ days overdue
  • Collections unsuccessful
  • Legal team approval required

Success Metrics

  • Collection Rate: 95%+ within 45 days
  • Days to Payment: Average 12 days
  • Customer Retention: 80%+ after resolution
  • Cost per Recovery: < 5% of recovered amount

Communication Templates

First Reminder (Friendly)

“We noticed your payment of $X for Invoice #Y is now past due. We’re sure this is an oversight…”

Second Notice (Urgent)

“URGENT: Your payment of $X remains outstanding. Please remit payment immediately to avoid…”

Final Notice (Firm)

“FINAL NOTICE: Your account is seriously past due. Without immediate payment, your account will be…”

Customer Experience Goals

  • Clear, professional communication
  • Multiple payment options
  • Easy resolution path
  • Relationship preservation when possible
  • Fair and consistent treatment
  • Invoice to Payment Flow
  • Payment Processing Flow
Edit this page