Managing finances is a critical aspect of any subscription-based business, and car subscriptions are no exception.
Just as revenues can compound in a subscription business, so to can outstanding arrears.
Effective monitoring of payments and timely identification of arrears is essential to maintaining financial stability and subscriber relationships.
In this article, we'll explore the methods, technologies, and strategies that automotive industry stakeholders can utilize to monitor payments and identify arrears, ensuring both financial health and customer satisfaction.
Implementing Robust Payment Systems
A reliable payment system that automates billing, tracks payment history, and sends reminders is crucial for managing subscriber payments. The automation of these tasks not only enhances efficiency but also minimizes human errors.
Industry stakeholders should invest in robust and purpose-built payment systems like Loopit that offer flexibility, security, and ease of use for both the business and the subscribers.
Attempting to manage payments in-house with a generic solution is often a false economy, with the cost of poor arrears management and human effort typically outweighing any perceived cost savings.
Identifying Arrears Early
Early identification of arrears can mitigate potential financial risks and facilitate timely intervention. Implementing real-time monitoring and alert mechanisms enables industry stakeholders to respond quickly to payment delays or inconsistencies.
A proactive approach to arrears identification not only protects revenue streams but also provides opportunities for supportive communication with subscribers.
Timeliness around arrears management will usually take into consideration any security deposit held against the subscription (if any) which dictates the number of billing cycles remaining before creating a loss-making scenario.
Handling arrears requires a delicate balance of sensitivity, timeliness and firmness in communication from the very first instance that a subscriber falls into arrears.
Failing to set expectations early with regards to miss payments can often result in further poor behaviour from customers. The intention is to quickly establish clear expectations around timely payments, and the consequences should these not be made.
Here are examples of emails that a customer service professional may use to contact a customer about their arrears:
Initial Reminder Email: Gentle Notice
On the first occasion, a gentle notice is often all that is required for a customer to take action. At this stage it is common that a simple oversight has resulted in a missed payment, and given the ongoing nature of car subscriptions it is important to be accommodating while still establishing clear expectations.
Subject: Friendly Reminder: Payment Due for Your Car Subscription
Dear [Customer's Name],
We hope you're enjoying your car subscription with [Company Name]. We noticed that your recent payment, due on [Date], has not yet been processed.
We understand that sometimes payments can be overlooked, so we wanted to send you this gentle reminder.
Please log in to your account to review your payment details and make the necessary arrangements. If you have any questions or need assistance, feel free to contact our support team at [Support Contact].
Thank you for your prompt attention to this matter.
Second Reminder Email: Firm Yet Supportive
If the first payment reminder is unsuccessful, it is crucial not to be complacent about payment follow-up to ensure swift action. At this stage, a payment failure is less likely to be a simple oversight.
Subject: Important: Outstanding Payment for Your Car Subscription
Dear [Customer's Name],
We hope this email finds you well. We want to bring to your attention that your payment of [Amount] for [Date] remains outstanding.
We value your subscription with [Company Name], and we're here to assist you if you have any concerns or issues related to this payment.
Please take immediate action to resolve this payment by logging into your account or contacting our support team at [Support Contact].
Thank you for your cooperation.
Final Reminder Email: Clear Consequences
At this point, it is wise to assume that the customer is intentionally not paying their arrears. It is important to remember that for both the business and the customer, often the best financial outcome is to work toward having the vehicle returned and placing the customer on a payment plan.
Otherwise, due to the recurring nature of subscription they will simply fall further into debt and expose your business to additional arrears.
Subject: Urgent: Final Notice Regarding Your Car Subscription Payment
Dear [Customer's Name],
Despite our previous reminders, we have not received your payment due on [Date].
We must inform you that failure to resolve this payment within the next [Number of Days] days may result in suspension of your car subscription services and your damage cover will no longer apply.
We urge you to take this matter seriously and make the necessary payment arrangements immediately.
If you are facing difficulties, please contact our support team at [Support Contact] to discuss potential solutions.
Thank you for your immediate attention to this critical matter.
These emails represent a progression from a gentle reminder to a clear statement of consequences, always maintaining a professional and supportive tone.
The duration of this email sequence should be no great than the subscriber's billing cycle duration. The intent here is to understand next steps before a second payment is missed.
The benefit of an email process is that they can be automated at scale, however personal follow up by phone is also valuable during this process.