Gaviti Data Shows Smart Dunning Strategy Boost Cash Flow by Up To 50%

Gaviti, an A/R collections automation system designed to help companies collect and manage client invoices, released newly collected data showing the impact of smart dunning emails vs. non-data-driven dunning emails. Organizations that rely on ‘smart’ emails have recognized an increase in revenue collected while dropping the average DSO, even at scale.

Traditional Dunning Emails are predefined collections-driven emails, which are sent out via an automation system as vendors reach late-payment thresholds. While a typical tool of finance teams, data shows a significant dropoff in recovery rate as the number of delinquent days increases. For example: “The recovery rate is highest on the due date and reduces dramatically thereafter, especially once you are past the 7-day mark from the due date, which means the odds of recovering a debt grow slimmer as the number of delinquent days increases.” On the day of delinquency, dunning emails have a 41% open rate with a 13% recovery rate. This is compared to day 30, which has an average open rate of 26% with a 4% recovery rate. While this is still higher than Mailchimp’s average open rate of 21% across industries, the lack of success highlights how 82% of small to medium businesses shut down due to poor cash flow.

Operating off the success of high open rates, applying smart analysis to dunning emails has the potential for companies to recognize the 50% revenue growth others are experiencing. Smarty finance technology becomes increasingly exciting once revenue hits a point of reliability that it can become scaleable. “Empowering finance teams with smart technology allows for greater impact per email,” said Yan Lazarev, Co-Founder & CEO of Gaviti. “Sending emails based only on how late a client has the potential to negatively impact the relationship that has been developed with the customer. Relying on data to understand their behaviors allows you to be available when they are most likely to pay and speaks to them on their terms, while meeting your organization’s needs.”

The report also cautions managers to understand the benefits and drawbacks of various automation technologies. Sending out automatic emails, based on days overdue or another threshold, without taking into account individual customer behavior, companies risk negatively impacting revenue and increasing churn due to unhappy customers or overwhelmed payment decision-makers.