Hey there, NetSuite newbies! Can you believe it’s already July? The year is halfway gone, and now’s a perfect time to review your accounts receivable. Whether you have a few stragglers or a mountain of overdue invoices, dunning letters might be just the tool you need to get those payments rolling in. Dunning letters are like friendly (or not-so-friendly) nudges to your customers, reminding them of their outstanding debts. These letters, sent at strategic intervals, can significantly improve your cash flow and keep your business running smoothly.

For those using NetSuite, dunning letters can be a game-changer. NetSuite offers robust tools for managing receivables, including the ability to automate the dunning process. This means you can set up a series of reminders to go out at specific times, escalating in urgency with each one. But before we get into the nitty-gritty of setting these up, let’s break down exactly what a dunning letter is and how it works in NetSuite.

What is a Dunning Letter?

A dunning letter is essentially a formal reminder sent to customers to prompt payment of overdue invoices. These letters are typically sent in a series, each one progressively more insistent. Here’s a closer look at the different stages of dunning letters:

First Reminder: Friendly Nudge Example: “Hey [Customer Name], just a heads-up that Invoice [Invoice Number] dated [Invoice Date] for [Amount Due] is past due. We’d appreciate it if you could settle this soon. Thanks!”

Usage in NetSuite: In NetSuite, you can schedule this reminder to be sent automatically a few days after the due date.

Second Reminder: Urgent Notice Example: “Hi [Customer Name], we noticed that Invoice [Invoice Number] for [Amount Due] is still unpaid. Please make the payment to avoid service disruptions.”

Usage in NetSuite: This can be set to go out one to two weeks after the first reminder, with increasing urgency.

Final Reminder: Last Call Example: “Dear [Customer Name], despite our previous reminders, Invoice [Invoice Number] remains unpaid. This is our final notice. If we don’t receive payment within [Number of Days], we may take further action.”

Usage in NetSuite: This final reminder can be triggered a few weeks after the second notice, warning of possible escalation to collections or legal action.

Different companies employ various strategies for dunning letters, customizing them to fit their specific business needs and customer relationships. While the typical dunning process often includes a first, second, and final reminder, many businesses go beyond these standard archetypes to create a more tailored approach. Here are a few examples:

1. E-commerce Companies: Often send personalized reminders at more frequent intervals, such as weekly, to ensure they stay on top of customer payments. They may use a series of five or more reminders, starting from a gentle nudge and gradually becoming more assertive.
2. Subscription Services: Tend to send reminders aligned with their billing cycles. They might start with an upcoming payment reminder before the due date, followed by overdue notices immediately after the due date, and continue with escalating reminders.
3. Utility Providers: Use a detailed dunning process that might include additional steps such as phone calls or text messages between written reminders. Their letters often explain the consequences of non-payment in detail, such as service disconnection.
4. B2B Companies: Typically have a more formal and structured dunning process. They might send a preliminary reminder a few days before the invoice due date, followed by a sequence of overdue notices. They also often include personalized communication, such as account manager follow-ups, to maintain professional relationships.
5. Educational Institutions: Use dunning letters to remind students and parents about overdue tuition payments. They may start with a friendly reminder, followed by more formal notices that include detailed instructions on payment plans and potential consequences of non-payment.

By customizing the frequency and tone of their dunning letters, these companies can better manage their receivables and maintain healthy cash flow. This flexibility ensures that the dunning process is effective while being sensitive to the nature of their customer relationships.

Why Use Dunning Letters?

Dunning letters are more than just reminders; they are a strategic part of your accounts receivable process. Here’s why they’re essential:

1. Encourages Timely Payments: Regular reminders keep your invoices top of mind for customers.
2. Improves Cash Flow: Timely payments mean more predictable cash flow.
3. Professional Communication: Maintains a formal, professional approach to collections.
4. Documentation: Provides a written record of your efforts to collect payments, which can be useful if further action is needed.

How to Set Up Dunning Letters in NetSuite

Alright, NetSuite newbies, let’s walk through setting up dunning letters in NetSuite. It’s a bit tedious, but bear with us—it’s worth it!

1. Enable Dunning Letters Feature

• Steps:Go to Setup > Company > Enable Features.Under the Transactions subtab, check the box for Dunning Letters.
• Example: Imagine you’re flipping a switch to turn on the dunning letters feature. This is the first step to unlock this powerful tool.
• Best Practices: Double-check to ensure the feature is enabled properly to avoid setup issues later on.

2. Set Up Dunning Levels

• Steps:Navigate to Setup > Accounting > Setup Tasks > Dunning Levels. Create different dunning levels with appropriate templates for each level.
• Example: Create a 30-day reminder that is friendly and a 90-day reminder that is firm and warns of potential legal action.
• Best Practices: Customize the language of each level to match the tone you want to convey at each stage.

3. Configure Dunning Procedures

• Steps: Go to Setup > Accounting > Setup Tasks > Dunning Procedures.Define the sequence and timing of dunning letters, linking them to the dunning levels you’ve set up.
• Example: Set the 30-day reminder to go out three days after the due date and the 60-day reminder to follow two weeks later.
• Best Practices: Test your procedure with a few dummy accounts to ensure everything runs smoothly.

4. Assign Dunning Procedures to Customers

• Steps: Edit customer records and assign the appropriate dunning procedure.Ensure customers’ email addresses are correctly entered for automatic sending.
• Example: Assign your newly created dunning procedure to a high-risk customer to see the process in action.
• Best Practices: Regularly update customer records to keep contact information accurate.

5. Review and Send Dunning Letters

• Steps: Regularly review your receivables and ensure the dunning process is running smoothly.Use NetSuite’s reporting tools to track which letters have been sent and follow up as needed.
• Example: Use the reporting tools to pull up a list of all overdue invoices and their dunning status.
• Best Practices: Schedule regular check-ins to review the effectiveness of your dunning letters and make adjustments as necessary.

Tips and Tricks for Using Dunning Letters in NetSuite

1. Customize Templates: Tailor your dunning letter templates to fit your brand’s voice and the specific needs of your customers.
2. Automate Wisely: Use NetSuite’s automation features to minimize manual intervention, but always keep an eye on the process to ensure everything works as expected.
3. Leverage Reports: Utilize NetSuite’s reporting capabilities to gain insights into your receivables and adjust your dunning strategy accordingly.
4. Stay Professional: Even when escalating the tone, maintain professionalism in your communications to preserve customer relationships.

Crafting the Right Dunning Letter

Creating an effective dunning letter involves more than just a template; it’s about striking the right balance between firmness and courtesy. Here are some tips:

• Be Clear and Concise: Ensure the purpose of the letter is immediately understood.
• Use a Polite Tone: Start with a friendly reminder and escalate as necessary.
• Include All Necessary Details: Invoice number, date, amount due, and payment instructions should be prominently displayed.
• Outline Consequences: Clearly state what will happen if the payment is not received.

Conclusion

Setting up dunning letters in NetSuite might seem tedious, but it’s a necessary step to ensure timely payments and a healthy cash flow. However, if you’re looking for a more streamlined approach, there’s a better way to handle this. Introducing Dunning+ by Salora ERP —a modern solution that automates the entire dunning process, consolidates communications, and provides comprehensive tracking.

1. Automated Communication:

• NetSuite Native: Basic automation for sending reminder letters.
• Dunning+: Enhanced scheduling and automation with complex rules.

2. Customizable Templates:

• NetSuite Native: Customizable letter templates.
• Dunning+: Advanced template editor with dynamic fields and conditional content.

3. Dunning Levels:

• NetSuite Native: Standard dunning levels based on invoice aging.
• Dunning+: Unlimited dunning levels with customizable escalation rules.

4. Customer Segmentation:

• NetSuite Native: Basic segmentation based on payment behavior.
• Dunning+: Advanced segmentation with detailed criteria.

5. Tracking and Reporting:

• NetSuite Native: Basic tracking and reporting.
• Dunning+: Advanced analytics and custom reporting capabilities.

6. Integration with Accounts Receivable:

• NetSuite Native: Basic integration with AR module.
• Dunning+: Deeper integration with enhanced data synchronization.

7. Automated Actions:

• NetSuite Native: Basic automated actions.
• Dunning+: Broad range of automated actions and custom workflows.

8. Email and Print Options:

• NetSuite Native: Supports email and print.
• Dunning+: Advanced email functionalities and enhanced print options.

9. User Interface and Experience:

• NetSuite Native: Basic interface.
• Dunning+: Intuitive, user-friendly interface with advanced features.

NetSuite ’s native Dunning Letters feature is suitable for basic needs, while Dunning+, makes managing your receivables a breeze, freeing you to focus on growing your business.

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Need help with anything NetSuite or accounting related? Whether you’re looking to optimize your financial reporting, streamline your operations, or just have some questions, we’re here to help! Reach out to Salora ERP for expert guidance and solutions tailored to your business needs. Let’s make your NetSuite experience seamless and powerful!

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