Here's Why You Should Be Texting for Collections (Accounts Receivable)
When you provide a service for someone, you want to be paid for that service, right?
Of course you do!
But sometimes people just forget to pay their bills. Other times, they need a few days to get the money needed.
It doesn't matter what kind of business you run. For situations like these (and more), you need to have a good collections or accounts receivable system in place.Otherwise, you'll be out a lot of money.
But what if you had an easier way to recoup more of the dollars you're owed? And what if you could do this without adding to your work load?
That'd be the dream, right? More money for your business without having to do anything extra? Well, that's what we're going to do today.
I'll show you how texting for collections can help you boost your bottom line without harassing customers or creating extra work for you. Let's dig in!
How does texting for collections compare to calls, emails, or letters?
Why not just call?
Phone calls used to be a great way to communicate with whomever you needed. The problem today is that most people don't answer phone calls.
Only about 10% of people are willing to answer calls from 800 numbers, and not many more are willing to answer calls from non-local area code numbers.
Robo-calls normally make things worse for everyone (and open your business up to multiple lawsuits, but we'll cover that later), so if you do want phone calls to be part of your collections system, you need real people calling.
After software, salaries, and other overhead, these calls are going to cost you about $1 per minute per person.
Considering up to 90% of the people you call won't answer, and calls that are answered take several minutes each, this isn't a very effective or efficient way to recoup the money you're owed.
What about letters?
Letters are easy. You can send a list of names and addresses to a company that will print and mail notices for you, or you can send the notices yourself for relatively little money.
The trouble is - depending on the size of your operation - these letters are going to cost you anywhere from $0.25 to over $1 each. And what happens when your customer gets it?
It's not easy for people to pay directly from a letter. Sure, they could fill out a form with their credit card info, or write a check, and mail it back to you.
But that's not very simple (or secure). It takes several extra steps for someone to read that letter - if they even open it - and actually get your money to you.
What's more likely to happen is your customer sees the notice, tosses it on their table without opening it, and forgets or refuses to do anything about it.
Like phone calls, this doesn't help many people, and costs you money.
Yeah, but we send emails.
Emails are another option - and a better one than the previous two.
In an email, it's easy to include a link back to your website. So customers who open your email - and have the funds to pay - can just click a link to pay from their computer or phone.
Note, over half of emails are opened on mobile devices (i.e. smartphones) these days. So when you're crafting your emails, be sure to make them easy to read on mobile devices.
Emails are really easy to send, and, in general, have a return of $44 to every $1 you spend. That's pretty good!
Emails sent and received to and from business accounts every day
Most email service providers charge you a fraction of a cent per email, so you can send the same customer a few emails over a few weeks, and it will cost you hardly anything. (There might be upfront costs for the software, though.)
Email sounds like a good option right now, doesn't it? It's cheap, normally has a good return, and people can pay you just by clicking a link in the email and entering their CC info.
But there's one problem.
Most emails aren't opened.
It varies by industry, but most email campaigns (like a collections notice) get about a 25% open rate.
There are a lot of reasons why this might be the case, and there are things you can do to improve it. But it still means 75% of the people who owe you money won't see your message.
How does texting compare?
So now we come to our fourth option - texting.
Texting for collections is a good idea, primarily for this one simple reason:
99% of all text messages are read.
That's 4X more than emails, and up to 10X more than phone calls. (It's impossible to say how many letters get opened.)
That means if 100 customers owe you money, you can send out one text to all of them and 99 will read it - usually within a few minutes. But it gets better.
In that text, you can include a link to your website for people to pay - just like you could do in an email. Your results might be different, but studies show an average 36% click-through rate in text messages.
What would that do for your collections?
The good news is that each text is only going to cost you a few pennies, too. Let's say you send out 100 texts and only one person pays you what they owe you. You're instantly getting an ROI in the percentage thousands.
So what if 5% of people pay you from that one message? Or 10%? 20%?
Texting for collections is very cheap, and it's very effective. It allows you reach virtually everyone you need, almost instantly, and makes it easy for the people who can to pay you back, too.
(Text Request's dashboard also makes it easy for you to manage all these messages, and any replies.)
So are you saying we should only text for collections?
Texting for collections is easy and effective, but like anything else you do, you're probably going to want a multi-pronged approach.
Letters probably won't hurt you, and emails could actively help you. But your strategy isn't complete unless you also add texting into the mix.
Besides, studies show that most people want to receive texts from businesses - and would rather get texts than calls.
You probably already have a way to manage the emails and letters you send customers. But do you have a way to manage texts as a business?
Text Request can make this really easy for you.
Every text in or out of our dashboard is permanently recorded for you, and you can have multiple users viewing the same dashboard if needed. (We also have tools built in to help you stay compliant.)
Let's talk about compliance.
Disclaimer - I'm not a lawyer, but here's what we know.
There are a lot of regulations around collections. (I'm sure you're painfully familiar with them.)
In general, the spirit of these laws is to not harass people. Don't be a jerk, just let people enjoy their lives. Legally, this means you have to follow a few important guidelines.
- You can only contact people between 8am and 9pm in their local time zone.
- If a customer asks you to stop contacting them (either by one form of communication, or altogether), you have to honor that request.
- If they have a lawyer for the situation, you have to talk to the lawyer instead of the customer.
- Anyone you text has to be made aware that they can opt out of texts from your business (e.g. saying "Text STOP to opt out.").
- You can't threaten people, or use profane language.
As long as you don't break these regulations, you can text people (or contact them in any way you wish). For more details, view this Fair Debt Collection Practices Overview.
So now what?
If you're ready to take the next step by adding texting to your collections or accounts receivable process, you can sign up for Text Request here.
There are no contracts, and we offer a 30-day money back guarantee, so there's no risk to getting started.
If you want to know more about Text Request, how it works, and how you can use it, join our webinar to see a live demo and have someone answer all your questions.