Automate the invoice reminder. Keep the phone call.

Most late invoices aren't a collections problem

When people picture overdue invoices, they picture a customer who doesn't want to pay. That happens. But look through any business's list of invoices more than thirty days late and a different picture usually appears.

One went to an accounts payable address that changed in the spring. One is missing the purchase order number the customer's system requires, so it's sitting in a queue nobody looks at. One was submitted by email when the customer only accepts invoices through their supplier portal. One has a disputed line item that the account manager has been meaning to sort out. One was paid last week, but the payment hasn't been matched to the invoice, so it still looks open.

And almost all of them are late partly because nobody on your side followed up. Chasing money is uncomfortable, it's never urgent today, and the person who should do it is busy doing the work the invoices are for.

That's the case for automation, and also the reason most automated reminders disappoint.

Reminders are a good job for software

A payment reminder sequence is close to an ideal thing to automate. The rules are simple and stable. A friendly note a few days before the due date. Another on the due date. Then a few more at agreed intervals, each a little firmer. The wording is the same every time. And the main failure today is that a person forgets or puts it off.

Software doesn't forget, doesn't feel awkward, and sends the reminder on time to every customer, not just the ones someone remembered. It can also send from the right person, at a sensible hour in the customer's time zone, with the invoice attached rather than described. A consistent, polite sequence is also fairer than whatever the finance team manages in the last week of the month, when the tone tends to depend on how stressed everyone is.

So yes, automate it. Just don't automate it blindly.

The sequence has to know what's going on

Here's the failure that gives reminder automation a bad name. A customer calls on Monday to dispute an invoice. The account manager agrees to look into it. On Tuesday, the system sends that customer a firm "your invoice is now overdue" message, because nothing told it about Monday's call. The customer, reasonably, feels ignored.

A reminder sent to a customer who called yesterday to dispute the invoice costs more than the late payment.

The fix is to make the sequence check the state of each invoice before it sends anything. At minimum, an invoice should be able to be:

• Disputed. Reminders stop, and the dispute is routed to whoever resolves it, with a date to follow up.
• Promised. The customer committed to paying on a date. Reminders pause until that date, then resume if nothing arrived.
• Partly paid. The next message acknowledges what was received and asks only for the balance.
• In the customer's approval process. Submitted to their portal or waiting on their internal sign-off. The message changes from "please pay" to "can we help get this approved?"
• On hold. An account manager has asked for a pause on a key account during a sensitive conversation. Paused, with a reason and an end date, so a pause doesn't become permanent.

Each of those states should be easy to set by the people who learn about it, from wherever they work, and visible to everyone else. If setting a dispute flag takes six clicks in the accounting system, people won't do it, and the robot will keep sending.

Fix the reasons invoices sit

The cheapest overdue invoice is the one that never became overdue. Automation helps here too, earlier in the process.

Capture the purchase order number and the billing contact when the order is placed, not when the invoice is due. Check them before the invoice goes out. Send each invoice the way the customer's accounts payable team actually wants it, whether that's a particular email address or their supplier portal. Put a payment link and clear remittance details on every invoice and every reminder, so paying is one step.

And match incoming payments to invoices every day. Many awkward reminders go to customers who have already paid, because the payment arrived without a reference and is sitting unmatched in the bank feed. A daily reconciliation step, with anything that can't be matched automatically sent to a person, prevents most of them.

If you're not sure which of these matters most for you, there's a quick way to find out. Pull your list of overdue invoices today and write one word next to each: why is it late? That list of reasons is the specification for your automation. It's the same idea as naming the exception before you automate the happy path.

Hand the hard ones to a person, with the history attached

Some accounts shouldn't be chased by software past a certain point. Your largest customers. Anyone more than a set number of days late. Anyone who has ignored every message. For those, the sequence's last step isn't another email. It's a task for a person.

That task should arrive with everything they need: the open invoices, the reminders already sent and when, any dispute notes, the last real conversation, and who the account manager is. The person then makes a phone call that's a conversation rather than a confrontation, because they know the whole story before they dial.

This is where the automation earns its keep. It does the steady, tedious work of reminding, keeps the record straight, and saves human attention for the accounts where a relationship is involved.

Where to start

Start small. Take your overdue list and tag the reasons. Write the reminder wording once, carefully, in your own voice. Decide the states an invoice can be in and who can set each one. Connect the reminder sequence to those states and to your payment matching, so it never sends to a customer who has paid or is in a dispute. Decide the point at which a person takes over.

Run it on a subset of customers for a month and read every message it sends. Then widen it.

That's how we approach business process automation: learn the whole process before automating a step, make exceptions visible, and give your team a simple way to step in. If chasing invoices is eating your month-end, tell us how it works today.

Related work: Sutton|Place.