Top 5 Dunning Management Challenges in NetSuite and How to Overcome Them

Collecting payment receivables is a challenging job, especially when you have to deal with unresponsive or rude customers. Businesses today consider dunning as a crucial and strategically important part of the collections process.

Sources: PYMNTS

Since more customers tend to ignore repeated reminder messages sent via emails, faxes, postal systems, and portals,  it results in delayed payments. These delays not only increase the risk of write-offs but also increase DSO and result in bad debts. Thus, it is necessary to focus on perfecting your dunning techniques. Dunning management is an automated payment recovery system that ensures timely payment and avoids any chances of account overdue.

Today there are various AR solutions available in the market that can be plugged with an ERP system to improve collections management. NetSuite is a new generation ERP that is widely adopted by companies across various industries and especially by mid-sized businesses. However, despite the support provided by NetSuite, users find it difficult to utilize its functions to the fullest.

Let us look at a few challenges faced by AR collectors and their implications when using NetSuite.

AR challenges that hamper smooth collections in NetSuite

NetSuite offers an automated dunning management solution. This application helps businesses manage their accounts receivables systematically and effectively. However, this innovative solution also comes with a few AR challenges that restrain the smooth collection of receivables.

1. Inability to identify at-risk accounts can put your AR at risk

For an efficient collections recovery, it is necessary to identify the customers who failed to make payments on time. Such at-risk accounts who also have a high-dollar-value outstanding invoice need priority attention.

After gathering all the necessary data from different teams, collectors have to manually scout through the customer data to identify priority accounts. The accuracy of this manual prioritization is dependent heavily on the availability of real-time customer data. Manually gathering data is time-consuming and increases the overall time-to-cash.

2. Manual dunning impacts your bottom-line:

One of the most important parts of dunning is sending correspondence messages. NetSuite at present does not support auto-correspondence. Analysts have to manually search through lists and identify priority customer accounts. They then customize each correspondence, attach the associated invoices manually, and send them out individually to the
customers via emails, faxes, and posts.

Sources: PYMNTS

This causes the analysts to lose touch with at-risk, high-value delinquent customers,  eventually affecting the bottom line. With manual processes, risks of write-offs, DSO, and bad debts also increase.

3. The absence of real-time data makes it harder to track correspondences

The absence of a centralized data repository makes it difficult for analysts to gather information for sending out correspondences. Since the task requires customer and invoice details, the absence of quick access to this data can delay the process. This may lead to misinterpretation of information, misunderstanding between internal teams, and hampered customer relationships.

When recording and updating customer data is done manually, it makes it difficult for analysts to track previous correspondence, payment history, and the account status of the customers.

4. Inconvenient user-dashboard tool

Having a user-friendly dashboard enables analysts to easily navigate and drive the entire collections process. NetSuite’s dashboard can be hard to navigate and difficult to understand. Due to its high level of complexity, many companies struggle with day-to-day AR activities. This can cause misinterpretation of data, resulting in higher overdue payments.

5. Threshold limitations and account support limitations

NetSuite has also set threshold limits in certain features that it offers for collections management.

• Email cap: NetSuite’s Dunning Email Sending Queue doesn’t allow more than 100 emails to be dispatched at a time. This limitation can result in a delay in time-to-cash if your company has a huge customer base or the volume of invoices is high.
• Dunning levels: NetSuite only allows you to create 15 dunning levels. This limitation affects companies that have long payment cycles.
• Printing dunning letters: NetSuite’s Dunning PDF Printing Queue allows users to print only 100 dunning letters at a time. This limitation can be a hurdle if you send a vast number of payment reminders by post.
• Limitation on file size: NetSuite limits file size to 5MB. If the size exceeds this limit it splits up the file into multiple parts. This limitation makes it difficult to track all the associated files and often results in data loss.
• Currency limitations: Only the companies dealing in multiple currencies can utilize the dunning management dashboard. Customers using a single currency system are not offered a dunning dashboard and have to perform the task manually.

Next steps

NetSuite is a widely accepted ERP system that enables businesses to become more efficient. Its innovative AR solution tools help mid-sized businesses boost their cash flow. However, it may not offer all the features you require to build a fully automated collections process.

Limitations in dunning management can lead to hampered customer relationships,  an increase in the overall time-to-cash, risk of overdue payments, higher days sales outstanding (DSO), and more write-offs. These, in turn, affect the company’s bottom line.

NetSuite’s dunning management dashboard can simplify the dunning process to some extent. But, if you are looking for a more progressive solution for proactive collections management, integrate NetSuite with intelligent AR automation tools. HighRadius has successfully enabled many companies to put their AR on auto-pilot. And with HighRadius’s RadiusOne, you can make your AR collections process proactive.

Are you looking for ways to make your AR collections management system more efficient? Here is what you need to ask yourself:

• Is your current dunning process slowing down your AR recovery?
• Do your customers ask for emails or postal correspondence?
• Do you stay on top of your high-risk customer accounts?
• Has your dunning process ever hampered your customer relationships?

Want to know more about how you can improve your AR collections management to get better results? Check this blog on how to Simplify Accounts Receivables with NetSuite and RadiusOne