Why Collections Email Templates Are Key to Better Accounts Receivable

Accounts receivable (AR) is a vital element of business due to its strong influence on customer experience. Yet many businesses are not optimizing their AR function, relying on manual email outreach instead of automated systems. Streamlining this workflow and moving toward automation can bring many benefits, including:

• Improved customer experience due to reduced mistakes and disputes
• Better use of staff time, freeing up AR professionals for higher-value work
• A more cost-effective AR process due to greater efficiency and speed
  

It all starts with a set of established collection email templates.

AR collection email templates are standardized form emails that help AR collections staff efficiently convey the right message to the right customer at the right time. Using these tools can give customers a much better experience of paying their bills—and accelerate cash flow by ensuring fewer past-due invoices.

Improving customer satisfaction through accounts receivable is an urgent need considering that 73% of executives recognize that the invoice-to-cash cycle is a frequent source of negative customer experiences, according to a study by Wakefield Research and Versapay.

The study also found that 72% of executives report concern that their AR department is not customer-oriented enough, and that 95% of them believe that increased transparency and collaboration between the AR team and customers would improve customer experience.

While the optimal solution is to implement AR automation technology to aid collections, there are steps to take in the interim to be more communicative and accelerate cash flows.

One option is making the most of collections email templates.

Jump to a section of interest:

• What is an accounts receivable collections template?
• The benefits of more efficient collections processes
• How to write strong collections email templates
• 5 collections email templates

‏‏‎ ‎

‏‏‎‎What is an accounts receivable collections template?

An AR collections email template is a standardized email template that’s populated with applicable personal information for each recipient and suited to a particular situation or need. It’s sometimes known as a payment collection email template.

These templates are helpful because collections staff spend a lot of time sending follow-ups to prompt payment and responding to a range of requests from customers. Scaling this process manually is difficult as collections staff each service multiple accounts. Plus, when collections outreach requires a disproportionate amount of your staff’s time, other more strategic initiatives tend to suffer.

Working with a set of established email templates can streamline the work, speeding up the collections process and reducing errors. Additionally, collection email templates are the foundation of an AR automation—and transformation—strategy, as they provide a means of standardized communication that automation software can fill in with the correct information.

—

🚨 If you're looking to go beyond collections email templates, take our six-minute assessment and get personalized recommendations for how to transform your accounts receivable

‏‏‎ ‎

3 ways email collection templates make accounts receivable more efficient

By leveraging optimized email collections templates, you stand to make your AR processes significantly more efficient, accurate, and cost-effective Here are three such benefits you'll enjoy.

1. Better use of staff time and lower costs

Using antiquated outreach methods—like email or phone—to keep the collections process moving demands intensive staff time, preventing AR professionals from working on higher-value tasks such as resolving legitimate disputes and instituting further process improvements.

Dedicating so much of the team’s time to tasks that could be done more efficiently drives up operational costs as well. Collections email templates are an easy solution that will give your AR team their valued time back.

2. Improved customer experiences

Human error in the payment process is the most frequently cited cause of invoice disputes, according to 50% of executives in the Wakefield-Versapay study. This is more than any other source including issues with goods or services, communication issues, or a breakdown in customer relationships.

A more standardized and efficient accounts receivable process provides a better experience for customers due to speed, reduced errors, and clearer communication. It follows that reducing human error by standardizing, leveraging collections email templates, and automating processes can immediately improve customer experience.

3. Reduced problems and risks

Poor communication in the AR process often leads to problems such as disputes, angry customers, and the threat of litigation. In fact, 78% of executives say that customer communication in AR is a problem, and 85% say that poor communication has led to nonpayment. And almost all surveyed executives—98%—report that upper management must get involved in payment issues or dispute resolution at some point.

Using email templates can spare management the need to step in because standardization and efficiency reduce disputes and other problems in the AR process. As management sees how much less attention AR requires with standardized approaches in place, AR staff can more easily make an effective case for further digitizing the process.

‏‏‎ ‎

How to write strong collections email templates

Strong collections email templates are central to improving accounts receivable processes. This is because effective communication saves time, increases accuracy of notifications, and encourages payment. Moreover, efficient use of templates enables a collections program to scale more easily by forming the basis of a broader AR automation effort.

The best practices for creating great collections emails are simple and straightforward:

• Write in a formal, professional, and concise style.
• Include a direct but non-threatening subject line.
• Be clear on what action you want the recipient to take.
• Thank your recipient for taking the requested action.
• Include your full contact information in the signature.

That said, we've done some of the hard work for you! Here are five email templates we suggest trying to streamline your communications, improve customer satisfaction, and prepare for further AR digitization. Customize these models to fit with your own needs.

‏‏‎ ‎

5 collections email templates

There are 5 collections email templates we recommend starting with. These include:

1. Welcome / credit approval
2. Due date notice
3. First collection email
4. Second collection email
5. Final collection email

1. Welcome / credit approval

Dear <first name>,

Welcome to your new account at <company name>. Your credit limit is <credit limit amount>.

You will receive your statement on the <day> of each month. If you pay before the due date, you will receive a <discount amount>% early-pay discount on the invoice total. A late fee of $<fee amount> will be added to any invoice paid after the due date each month.

We offer our customers the convenience of paying digitally by ACH or credit card via our online payment portal. In there you’ll also find all your account information, including terms and conditions, as well as your preferred payment methods.

<link to portal>

We look forward to partnering with you. I welcome any questions and concerns at the contact information below.

Sincerely,

<sender’s name>

<sender’s title>

<sender’s address>

<sender’s email>

<sender’s phone>

2. Due date notice

Dear <first name>,

Here’s a friendly reminder that your payment for invoice <invoice number> is due today, <date>.

We offer you the convenience of paying by credit card or ACH via our online payment portal. To avoid a late fee, please sign in today to make this payment to bring your account up to date.

<link to portal>

I am attaching the invoice for your reference. Please reach out to me with any questions or concerns.

Sincerely,

<sender’s name>

<sender’s title>

<sender’s address>

<sender’s email>

<sender’s phone>

3. First collection email for past-due invoices (a.k.a first dunning letter)

Dear <first name>,

I am writing to inquire about your payment for invoice <invoice number>, which was due on <date>. I am attaching the invoice for your reference.

A late fee of $<fee amount> has been added to this invoice and is now reflected in the amount due in the payment portal. Please sign in to make this payment as soon as possible.

<link to portal>

If you have already made this payment, please reach out to our customer service team at <phone number>.

Sincerely,

<sender’s name>

<sender’s title>

<sender’s address>

<sender’s email>

<sender’s phone>

4. Second collection email for past due invoices (a.k.a. second dunning letter)

Dear <first name>,

This is our second notice that your payment for invoice <invoice number> is now past due. The payment was due on <date>, and a late fee of $<fee amount> has been added to this invoice.

Please sign in to our portal to make this payment by credit card or ACH as soon as possible.

<link to portal>

If you have already made this payment or are unable to make this payment right away, please reach out to our customer service team at <phone number>.

I am attaching the invoice for your reference.

Sincerely,

<sender’s name>

<sender’s title>

<sender’s address>

<sender’s email>

<sender’s phone>

5. Final collection letter for past due invoices with notice of legal action

Dear <first name>,

I am writing with a final reminder to pay invoice <invoice number> immediately. This payment was due on <date> and is now <number of days> past due. A late fee of $<fee amount> has been added to this invoice.

If we do not receive your payment by <date>, we will escalate to legal action.

Please make the payment right away via our portal.

<link to portal>

If you have already made this payment, reach out to our customer service team at <phone number>. I am attaching the invoice for your reference.

Sincerely,

<sender’s name>

<sender’s title>

<sender’s address>

<sender’s email>

<sender’s phone>

‏‏‎ ‎

For the most efficient collections, think beyond email

Creating effective collections email templates is only the first step in making your AR process as efficient as it can be. These templates can form the backbone of a broader AR digitization effort, which goes beyond email to create a more collaborative, transparent relationship between AR and customers.

Options and tools like collaborative payment portals, real-time dispute management, a clean audit trail, and detailed reporting help create a truly optimized AR function.

Business leadership typically sees AR digitization as useful, but does not prioritize it. According to the Wakefield-Versapay study, executives recognize that AR digitization can create better communication with customers (44%), speed up dispute resolution (44%), and improve internal collaboration (40%). Yet 60% of C-level executives say their AR departments haven’t been prioritized as much as other departments for digitization.

Withholding the benefits of digitization from AR is a mistake, since improving the process can benefit the business in many ways.

Organizations interested in creating a more digital collections process need to get ready for transformation. Take our six-minute AR Transformation Roadmap Assessment and learn how prepared you are to take your AR function digital. And check out The CFO’s Guide to Accelerating Collections to find out more about how and why to pursue this high-benefit improvement to your operations.