Everything’s going smoothly for your online business. You have customers subscribed to your SaaS services or membership sites. The beauty of subscription businesses is that it’s based on the recurring revenue model. However, subscription business owners will know that it’s important to keep track of whether the monthly recurring revenue (MRR) is going up or down.

If your MRR seems to be dipping, it’s time to take a look at why this is the case.

Why do customers miss payments?

Image of subscription billing platform

There are many reasons why some customers miss their payments.

  • Billing errors: These would cover discrepancies in invoices. Customers would then seek clarification before pushing with the payment.
  • Payment processing issues: Technical issues like problems with online payment gateways can lead to payment delays.
  • Customers missing reminders: There’s a good chance your reminder notifications get lost under a landslide’s worth of other messages and notifications. 
  • Credit card issues: If your subscribers’ credit cards are maxed out or expired, the payment will not go through.
  • Voluntary reasons: It can also be that your subscribers decided that your subscription business is not a good fit for them. When it comes to this, they can end up canceling their accounts voluntarily. Business owners who notice an increasing churn rate should take a step back and focus on reducing customer churn.

While you can give your customers the benefit of the doubt, late payments still mean money left on the table. Is there anything you can do to help your customers pay on time?

It’s time to call upon the software designed for this situation—dunning management software.

What are the functions of a dunning management software?

Subscription business owner exploring dunning management platforms

This is software that helps automate and streamline the dunning process. You’ll have a plethora of functions to help you communicate with customers who have unpaid or overdue payments. These functions include:

Automated communication

You can set up automated notifications, reminders, and payment requests to be sent to your customers. You can integrate this system with your email, SMS, or other existing communication channels.

Customizable messaging

You’ll also have the ability to customize the content and timing of your dunning messages. Feel free to customize them to align with your branding and your customers’ preferences.

Multiple payment options

You can make more payment options available to your customers. Dunning software can integrate with popular payment gateways or processors to further customer relationships and make payment recovery smooth and hassle-free.

Payment tracking

Dunning software can help you with tracking payment attempts and updating account statuses. You’ll be able to monitor payment progress as well and gain a clear surveillance of the whole process.

Automatic alerts and notifications

You can stay updated on payment milestones reached by setting up alerts and notifications. This is extremely helpful for staying informed when customers respond to dunning messages as well.

Seamless integration

You can integrate dunning software with your existing accounting, recurring billing software, and CRM systems. This should enable you to get a comprehensive view of your customers’ accounts and financial data.

Reporting and analytics

Dunning management software usually offers reporting and analytics features. These should help your business analyze the effectiveness of your dunning service. You’ll get important insights that could help you identify trends in late payments.

Key benefits of using dunning management software

Customer reading an email that is part of the dunning process for their accounts payables

The ‘why’ behind using dunning software and subscription billing platforms is already obvious, but let’s break down the key benefits of using dunning management software for subscription-based businesses:

Ability to help maintain stable cash flow for your business

When your customers pay on time, your revenue will flow consistently. This recurring billing allows you to pursue growth opportunities for your online business. On-time payments will also make your MRR predictions more accurate.

Prevention of revenue leakage

Let’s say you have a subscription model that has automated processes for dealing with accounts with late or failed payments. Your model would automatically cancel a customer’s subscription even if the late payment was a cause of involuntary churn.

A dunning software will help you minimize these instances, as it gives the subscribers a chance to pay and keep their subscriptions. This can then lead to an improvement in your customer retention rate.

Decreasing customer churn rate

In most cases, customers really just need a gentle reminder. Dunning software can help you optimize your reminders and follow-up process. You’ll help your customers maintain their subscriptions by making them aware of their outstanding invoices.

This is something your customers would appreciate a lot—giving them more reasons to pay on time and stay subscribed.

5 factors to consider when choosing a dunning software

Business owner studying different platforms to help collect outstanding payments

Here’s a quick list of factors you’ll need to consider when selecting your dunning management platform.

  • Features and customization. Most dunning management software would let you start out with the basic features you need to get started. However, there will be more advanced features you can only access by paying a higher cost. Some of these advanced features include payment plan management, automated communication workflows, and integration with third-party systems.
  • Scaling and usage. There are providers who offer tiered pricing depending on the number of your customers and usage volume. If you’re just starting out but looking to scale quickly, it’s important to choose a powerful subscription management software provider that can scale with you.
  • Support and maintenance. The level of customer support can vary among software providers. Choose a provider that has support options that match your preferences—whether it’s a comprehensive knowledge base or the option to jump on a call with a dedicated representative.
  • Integration needs. Remember that dunning management software is another addition to your tech stack. It’s important to do intensive research to see if the software of your choice can integrate seamlessly with the rest of your tools.
  • Training and onboarding. If you’re interested, some providers offer systematized onboarding to help you get started with their software. This is optional of course. But if you’re looking to learn how to use subscription management software or dunning software’s full capabilities, consider learning from the providers themselves.

5 dunning management software and platforms to explore

Business owner choosing among different payment gateways, subscription services, and dunning management platforms.

1. Recurly (Starts at $0 for free trial; advanced features behind custom pricing models)

Best for: small businesses, mid-size businesses, and large enterprises

Key features:

  • Subscription analytics: Recurly offers robust subscription analytics and reporting tools to help you understand customer payment behavior and optimize dunning strategies
  • Revenue optimization engine: You can dynamically adjust dunning settings based on transactional data to maximize revenue recovery.
  • Proactive failed payment prevention: Recurly tries to be one step ahead so you don’t have to deal with failed payments. The software checks customers’ accounts and credit cards for any updates and even works with account updater programs from leading credit card providers themselves.

2. Chargezoom (starts at $9/month; offers 90-day trial of full product suite)

Best for: small businesses and medium to large enterprises

Key features:

  • Branded customer portal: Chargezoom lets you customize your payment portal to look and feel like an extension of your brand. This makes for a smooth customer experience.
  • Branded emails: Customers will immediately recognize your emails, helping them react faster—and pay sooner.

3. Bluesnap (pricing is discussed through a scheduled consultation)

Best for: medium to large businesses and large enterprises

Key features:

  • Ease of global payment management: Global payment types and over 100 currencies are covered ensuring the most convenient payment experience for your customers.
  • Accounts receivable automation: Say goodbye to manual processes that contribute to delayed payments. This includes automated invoicing, billing, communicating with customers, managing documents, and a branded customer portal.
  • Subscription and recurring billing: This features automatic retries for failed payments as well as automatic customer payment information updates.

4. Chargebee (starts free for your first $250k of cumulative billing and $0.75/month

Best for: small businesses and scaling businesses

Key features:

  • Smart retry logic: Chargebee’s dunning management includes an intelligent retry logic that optimizes payment retry schedules based on historical data and customer behavior.
  • Automated communications: It offers automated email communication to remind customers about payments, and businesses can customize the content and timing of these emails.
  • Subscription lifecycle management: Chargebee provides end-to-end subscription lifecycle management, including billing, invoicing, and revenue recognition.

5. Maxio (starts at $599/month)

Best for: small to medium businesses looking to level up

Key features:

  • Subscription metrics: Maxio provides you with detailed subscription metrics and analytics. Making it easier for you to gain insights into your subscription revenue and payment trends.
  • Automated collections: They also offer automated collections workflows and payment reminders. In turn, simplifying the collections process.
  • Compliance and reporting: Maxio includes features for compliance with accounting standards and generating financial reports.

Tips for optimizing your dunning management software

Team leader discussing with a team about ways to optimize the dunning process

Get to know your customer base

  • Segment your customers based on their payment behavior. Distinguish between high-risk, moderate-risk, and low-risk accounts.
  • Customize your dunning workflows and communication strategies. Doing so will help you align with these segments, ensuring tailored approaches.

Automate your dunning workflows

  • Set up automated dunning workflows that handle payment reminders, follow-up emails, and payment retry attempts.
  • Ensure your software can adapt dynamically to various scenarios and customer responses.

Leverage multi-channel communication

  • Utilize a mix of communication channels, including email, SMS, and in-app messages. It’s always important to engage your customers through their preferred channels.
  • Coordinate your messages to maintain consistency and coherence in your communication strategy.

Personalize your messages

  • Infuse your dunning messages with a personal touch by including the customer’s name and pertinent account details.
  • Address specific payment issues or overdue amounts in your communications to resonate with customers.

Fine-tune your timing and frequency

  • Identify the best timing for sending payment reminders and follow-up messages. Consider time zones and customer online behavior.
  • Adjust message frequency based on customer responsiveness to avoid annoying them by flooding their inboxes. Remember that customer satisfaction is always a priority when it comes to subscription-based businesses—and this includes how businesses conduct the dunning process.

Integrate seamlessly with payment gateways

  • Ensure seamless integration with payment gateways. Doing so enables real-time payment processing and minimizes friction during transactions.
  • Verify that the integration supports international payments if your business operates globally.

Compliance and legal adherence

  • Guarantee that your dunning processes completely with pertinent regulations, such as GDPR or PCI DSS.
  • Respect your customer’s preferences by incorporating opt-out options in your communication.

Embrace testing and continuous improvement

  • Conduct A/B tests for different dunning messages, subject lines, and delivery times to pinpoint the most effective approaches.
  • Evolve and refine your dunning strategies based on test outcomes and feedback from your customers.

Prioritize scalability and integration

  • Opt for dunning management software that scales seamlessly with your growing business as well as multiple payment gateways. That way, even as you scale your business, the dunning process can still deliver.

Combine a failed payment recovery strategy with a dunning software for best results

A dedicated failed payment recovery specialist conducting personalized calls to help collect payments and recover lost revenue

You have a variety of dunning management software to choose from—all of which come equipped with features that make it more convenient to recover late or missed payments. Most of the time, your subscribers really just need timely reminders and a hassle-free payment process. 

For even better results, it’s a worthwhile strategy to combine your dunning software with a failed online payment solution and recovery service like Recover Payments. Recover Payments elevates and maximizes the dunning systems you already have in place. With a dedicated failed payment recovery specialist, there is an additional layer that is able to zone in on your subscribers and monitor how much revenue is being recovered.

Book a call with Recover Payments today and explore the solutions that will benefit your software platform.