How to improve your business cashflow with SMS

by Emily on April 30, 2018

in Articles

It’s no surprise to business owners that achieving an effective cashflow system is essential to their success. However, many small to mid-sized organisations find themselves struggling to manage a positive cashflow platform.

Businesses have tried several tactics to receive payments on time such as offering early payment discounts, providing multiple payment options, calling customers as a reminder and sending reminders in the mail. However, these traditional methods have a problem; they’re costly and time-consuming.

So, what’s the affordable solution to improving cashflow without wasting resources? SMS payment reminders.

What makes SMS the best tool for payment reminders

Studies from the National Bureau of Economic Research have found that SMS payment reminders can improve on-time loan payments by 7-9%. Late payments are also reduced on average by two days a month when using SMS reminders. These statistics show that sending payment reminders through SMS is very effective, but why exactly?

High open rates

SMS is direct and creates an instant communication channel between a business and their customer. The prevalence of the mobile phone makes SMS the most effective way to reach customers, with research by Morgan Stanley showing that over 90% of people keep their mobile within arms-reach all day. The close proximity of mobiles has resulted in SMS boasting an open rate of 98% – meaning payment reminders via SMS are more likely to be seen than through alternative methods. These high open rates are achieved by reaching customers when they are away from their desk and by avoiding numerous spam filters linked with email.

Fast delivery and receipt

Businesses can create and send payment reminders in just minutes by using SMS software. A web SMS platform is easy to use and is much quicker than traditional methods such as calling or sending reminders in the mail. Not only is delivery faster but the response rate is improved too, using SMS reminders. SMS messages have an average response time of just 90 seconds, whilst it takes 90 minutes on average to receive a response over email. It can take up to 6 days to receive a posted letter in Australia making debt collection very difficult. SMS payment reminders remain the quickest way to obtain a response from customers and keep your cash flowing.

Low-cost

SMS payment reminders cost just a few cents each whilst reminders sent through the mail can be quite expensive. Once accounting for admin, printing and postage costs it can exceed $5 per payment notice. Postage also has no guarantee of receipt meaning that repeat letters may be necessary. Using SMS software to send reminders reduces time and money spent on administration and print costs. Calling customers is also expensive as it requires significantly more human resources to conduct than SMS reminders.

Improves customer satisfaction

Calling a customer or sending a letter of notice is often seen as a more confrontational method of sending a payment reminder. SMS reminders are commonly thought to be less threatening, which can improve customer satisfaction. Studies from OneReach found that SMS payment reminders are popular amongst younger consumers, with 85% of students preferring SMS as a customer service platform. Customers who forget to pay on time will appreciate the reminder before incurring late penalty fees which can increase customer retention.

Message automation and integration

SMS software can simplify the payment reminder process by using message automation and API integration. By using API integration to incorporate SMS into your existing software you can automatically send reminders depending on due dates or amount owing without lifting a finger. This process is highly efficient and ensures consistent service for all customers.

Final thoughts

An effective payment reminder system is critical for managing business cashflow. The ubiquity of mobile phones has made SMS reminders an effective, low-cost and easy platform for improving debt collection. Implement SMS payment reminders today to improve cashflow and ensure you receive payments in a timely manner

Comments & Leave a Comment

comments

{ 0 comments… add one now }

 

Leave a Comment

CommentLuv badge

Previous post:

Next post: