Collection: Timely Payment Through Effective Management

22 January 2018 Billing Collection

The invoices are sent out, and then the money starts flowing in on its own. That might seem like an easy observation, but don’t be mistaken: steering the payment behavior of your debtors is achievable with the right process setup. What are the challenges?

This is part 5 of a series of blogs by FIQAS on optimizing invoicing processes.

Steer the payment behavior of your debtors

When your debtors pay on time, your DSO decreases, your cash flow improves, and your investment position strengthens. Every day an earlier payment arrives, it provides better liquidity. Conversely, every day of delay impacts your liquidity position. There’s much to gain from properly configuring the processes that influence payment behavior. The payment process itself, as well as the processes leading up to it, are crucial for timely payments.

A smooth invoicing process as the initial step toward proper payment behavior

A smooth invoicing process (refer to FIQAS’ previous blogs on this topic) is a significant prerequisite for healthy payment behavior. Correct and comprehensive information on the invoice fosters clarity and trust with the customer. In turn, invoices result from accurate administration of customer and order details, and, depending on your business model, from a pricing process. Of course, the quality of services or products delivered must also be top-notch. A satisfied customer is always willing to pay.

Payment security can even be integrated earlier, specifically in the payment model offered to your customers. The advantages of prepayment and payments via direct debit are evident. Even a model based on pre-settled credits or points ensures security.

The simpler the payment process, the lower the payment threshold

The payment behavior can naturally be influenced within the payment process itself. The simpler the payment method, the lower the barrier to payment. Fortunately, numerous methods are available for payment options and collections:

    • Digitized payment mechanisms are now more the rule than the exception. Invoices are delivered as PDFs via email. Invoice emails contain a direct payment link or a link to the platform of a payment service provider. Invoices can be retrieved and paid from a web portal. And let’s not forget the true digital invoice: the UBL invoice.
    • Automatic direct debit occurs within the EU according to the SEPA standard. In the event of a reversal, a code is provided. Depending on this code, a re-collection may or may not take place. For instance, in the case of a reversal due to insufficient funds, a new collection attempt can be made within a few days.
    • For significant corporate debtors, it’s worth considering settling payments at a time convenient for the customer after consultation. While this tailored approach might require more customer contact, it does lead to quicker payments. Additionally, it provides an extra opportunity to strengthen the relationship with the customer.

Reminder still necessary? Keep it amicable

However well-devised and set up the process is, there’s always a small percentage of invoices that aren’t paid within the specified terms. The art lies in keeping the collection of these outstanding invoices as much as possible within the amicable trajectory. With suitable software and smart reminder procedures, a large portion of late payments can still be collected, all while maintaining a friendly approach that keeps the customer relationship intact. Some tips:

  • For larger volumes of outstanding invoices, it’s advisable to have a reminder process based on an automated workflow. Ideally tailored to different segments in the customer base. Use a data warehouse and business intelligence software to analyze payment behavior per segment and determine the follow-up action based on that.
  • Place the reminder process where it belongs: in the invoicing platform, not in the financial system. This works much more efficiently as it doesn’t require feedback from the financial system.
  • If payment still doesn’t materialize, then the service may need to be suspended or limited. In telecom, for example, a link with provisioning is useful for this purpose: if payment is not received, the service can be throttled automatically based on a signal from the invoicing platform.
  • And if the amicable trajectory needs to be abandoned: integrating the invoicing platform with the collection agency’s system ensures an efficient and error-free process. Note: the file must be complete and compliant with laws and regulations for this to happen.

From FIQAS’ practice

The payment and reminder processes that FIQAS sets up for its clients, and often executes, have many similarities. However, there are almost always parts in which the setup of these processes differs per client.


It’s quite common for FIQAS’ clients to make their invoices available in a client portal. The end customer receives an invoice notification via email. The email contains a link to the invoice in the client portal, but the invoice can also be sent as an attachment (in PDF). Sometimes, invoice details are already shown in the text of the email. Furthermore, these emails almost always contain a link to iDEAL or another payment platform, possibly via the platform of a payment services provider.

The payment status can be displayed in the emails. This happens dynamically: an outstanding amount is presented in red. If the email is reopened after payment, the payment status appears in green. Thus, the email always shows the current payment status. Finally, the notification emails also have space for marketing texts, which can lead to upsells and cross-sells.

A few client-specific examples:

A blueprint for various entities worldwide

A well-known internet marketplace has various entities in countries around the world. In the FIQAS system, the processes are set up based on the same blueprint. However, the used collection methods differ slightly.

For end customers in Belgium, Italy, and Germany, SEPA direct debits are executed, a relatively straightforward process. The advantage of SEPA is that it’s a European standard, which facilitates implementation for new entities and/or European countries. This requires 100% accurate administration of customer data, plus a mandate from the end customer.

However, customers in the Netherlands only pay via iDEAL or PayPal; no direct debit process is set up. They receive a notification by email, in which an active payment link always shows the current payment status. For other countries, FIQAS has implemented separate collection logic based on national requirements. This is the case, for example, for Australia. In yet other countries, there’s no collection/debtor process at all, but a process of prepaid invoicing (“paid on site,” for instance, via Payment Service Providers like Braintree and Adyen). Customers in these countries only receive an invoice afterwards.

For all entities, a straightforward dunning process is used. No paper reminders are sent anywhere; everything goes by email.

Technical reversals, specific reminder handling

Direct debit payments can be reversed for various reasons. Due to a technical cause, for example, because data is incorrect or incomplete, or because there’s insufficient balance in the account, or because the account holder decides to reverse the payment. Reversals due to technical reasons can be identified by specific codes and are part of the automated process.

For a German internet platform for skilled tradespeople, the reversal process is set up in a way that if there’s insufficient balance in the account, an automatic re-collection is done three days after the initial failed attempt. This is neatly announced in the reminder email sent to the customer. This re-collection can only be executed once; continuous attempts are not allowed. If the second attempt fails as well, then the invoice will be included in the reminder process.

Automated Accounts Receivable Management: Efficient Processes Lead to Better Payments
Managing customers’ payment behavior can be effectively controlled. It starts with managing customer and order information, followed by ensuring the accurate delivery of the sold services and products. Invoices must be accurate, and when payment methods are straightforward and comprehensive, timely payments are usually not an issue.

However, if reminders are necessary, it’s crucial to conclude the reminder process in an amicable manner. It’s essential to avoid, as much as possible, the unpleasant path of legal collection, as it is expensive and detrimental to the customer relationship.

Other topics and the purpose of this series:

  • Part 1: Invoicing, It Can Improve
  • Part 2: Data Collection
  • Part 3: Pricing
  • Part 4: Generating and Sending Invoices

FIQAS specialists have a wealth of experience in setting up, executing, and optimizing invoicing processes. The business cases we encounter often focus on one or two of the aforementioned aspects. Through this series of articles, we aim to address the broader spectrum.

Erik Henselmans
Martin van Noort

FIQAS has been an authority in the field of invoicing processes since 1989, serving renowned clients both domestically and internationally.

More information?

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Senior Consultant

+31 297 382323

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