While many businesses utilize debt collection agencies to address outstanding invoices, using a do-it-yourself service for SMS collections is a good first step. Once you have issued payment reminders via text message, you can begin to explore involving a third-party collection agency to do the heavy lifting. There are many reliable third-party collection agencies to choose from.
Before partnering with a legitimate collection agency, you can follow fair debt collection practices to contact customers via SMS. Using SMS text messages to follow up with customers could potentially help you avoid involving debt collectors and, eventually, incurring court costs further down the line. If you want to nip this in the bud before involving a collection agency, SMS text messages are the way to go.
Discover why SMS is so effective for chasing money owed and learn how to get started below.
Why use SMS for debt collection practices?
Persuading customers to pay their bills on time is often challenging, time-consuming and expensive. Typically, debt collection starts with reminders, either by phone or in writing. If reminders don’t work, and once several missed payments are due, the debt is usually passed on to a debt collection agency that charges a fee for debt recovery. More costs are involved if the debt goes to court.
In an ideal world, it’d be great just to send one or two reminders to receive payment before debt collection costs start to escalate. But the problem with phone calls, letters and emails is that they can easily be ignored by customers. Phone calls can be instantly diverted to voicemail, while emails and letters can seemingly ‘go missing’.
SMS is much harder to ignore because it’s a more direct channel of communication. 98% of texts are opened, whereas the average email open rate is 21.33%. Texts are delivered more or less instantly, and better still, 90% of people read texts within three minutes. So using SMS could mean you receive payments more quickly into your account than with other debt collection methods.
Another benefit of SMS is that (provided you use an SMS provider) you can text all your debtor customers simultaneously, rather than phoning them one by one – a huge time saver.
Additionally, SMS can be received on any mobile phone (smartphone or not), and transmission doesn’t rely on wifi. Through your SMS provider, you should be able to track your campaigns to verify that your messages have been delivered.
Finally, SMS is considered an affordable channel, compared to phone calls. With Messente, for instance, you only pay for the text messages you send. To give you an idea, it’d cost just 3.24 € per month to send 200 one-way messages to the United States. View Messente’s pricing by country here.
To avoid involving debt collectors, you can use SMS to:
Remind customers that payment is due.
Request that customers update their payment method.
Thank customers for making a prompt payment.
Inform customers that you’re taking legal action due to default accounts.
Educate customers about the impact of late payments, and more.
Are SMS debt collection messages legal?
Before you start texting, you need to make sure you’re on solid legal ground.In many jurisdictions, such as under the Telephone Consumer Protection Act (TCPA) in the US, you must have the customer’s express written consent to receive SMS messages about their debt.
This typically means you need to include opt-in language in your original contract or signup form that clearly states you may send billing or debt-collection texts in the future. You need to record this proof of consent, storing it with your customer records, in case you’re audited.
Message frequency disclosure is also important, under which you need to tell your customers what to expect (e.g., “You may receive up to three messages per billing cycle”).
Failing to comply with these business texting laws can lead to steep fines. For instance, if you don’t have the consumer’s consent, you will be fined for each unsolicited text you send.
If you want to stay above the law, always verify local regulations (e.g., GDPR in the EU, TCPA in the U.S., or equivalent laws elsewhere) before sending debt-related SMS messages.
Successful SMS debt collection strategies
Here at Messente, we’ve conducted our own research into using SMS for debt collection. As such, we’re able to share with you some real-life SMS debt collection strategies.1. Send an SMS on the customer’s payment due date
According to one of our clients, sending an SMS on the customer’s actual due date leads to the majority of payments being made on that particular day.
2. Send SMS payment reminders in advance
Another approach that seems to work well is sending out the first payment reminder a week before the customer’s bill is due, followed by a second reminder a couple of days before the due date. Once the due date has passed, a third reminder is sent. This process can be automated, provided you integrate your SMS messaging app into your CRM system.
3. Include the numbers in your message
To maximise the impact of a debt collection SMS, a good approach is to include the amount owed within the text, plus instructions on how to pay (e.g., directing the customer to an online payment portal). Seeing how much money is owed can prompt the customer to bring their account up to date.
4. Consider using SMS alongside phone calls
Many of our clients use a combination of text messages and phone calls to chase debts, but one relies purely on SMS because it’s a less aggressive approach and their customers appreciate that. Your own strategy will depend on the types of customers you have and how they interact with your communications. Keep testing your SMS strategy to see what works best.
How to start using SMS for debt collection
If you are curious about using SMS for debt collection, you need to get your hands on the right solution. Fortunately, there is no shortage of SMS text messaging services on the market for businesses to choose from. When it comes to chasing up delayed payments, one solution stands out from the crowd.
Getting started with SMS is simple when you use Messente’s SMS API. It can be integrated into your business system within a day with the help of a junior developer. Our Quickstart Guide enables you to start using Messente in minutes. Just three steps are needed:
Sign up to Messente (free) and receive your API keys.
Apply for a Sender ID, which can be your own phone number, a branded Sender name, or a dedicated shortcode or long code number.
Make an API request using your API keys to send your first text – this is something your developer will be able to do easily using our documentation.
Alternatively, if you don’t want to integrate Messente into your own system, you can send text messages using Messente’s user-friendly online dashboard. You’ll see the dashboard when you sign up to create your account.
Are there any restrictions for using SMS for debt collection purposes?
Even after you’ve obtained consent, you must follow certain operational rules to stay compliant and maintain customer trust. Here are some restrictions and conditions you must keep in mind.
In many regions, SMS messages may only be sent between certain fixed hours of the day, e.g., between 8 p.m. and 9 p.m. in the recipient’s local time.
Every SMS message must include an opt-out option; it’s mandatory. Something like a simple “Reply STOP to unsubscribe” instruction will work. You must immediately stop messaging as soon as you receive that request.
Clearly identify your company name and state the purpose of the message (e.g., “Reminder: Your invoice #12345 is due.”).
Safely store logs of consent, message content, delivery receipts, and opt-out requests for a certain period of time, as defined by any local or global regulations you are to adhere to.
You must follow your SMS provider’s terms of service. Some of them might restrict certain keywords (e.g., “debt collector”) or require pre-approval for sensitive campaigns.
Best practices to follow so that you don’t feel like a scammer
Debt-collection fraud is on the rise. Scammers often impersonate legitimate creditors, demanding payment via text or phishing links. To distinguish your messages as authentic and keep customers at ease, make sure you stick to these best practices.
Verify your identity: Use a consistent Sender ID or number that customers recognize. If you change Sender IDs, make sure you warn your subscribers in advance.
Keep your SMS clear and concise: State the invoice number, amount due, and a straightforward payment link. Avoid jargon or threatening language.
Respectful personalisation: Include the customer’s name and reference the service or product. This reassures them that you have the correct account.
Include opt-out instructions: Always include a simple instruction telling customers how they can opt out of your texts. This transparency builds trust and is also typically legally required.
Use HTTPS links: Make sure you link only to HTTPS-secured payment portals. Also, bonus points if you educate your customers to check the URL before they log into or make any online payments via your portal.
Add contact options: Include a valid phone number or email and welcome questions from customers so that they know you’re a legitimate business.
Respond promptly: If customers reply to your SMS or ask a question, don’t make them wait unnecessarily. Send payment confirmations as soon as possible to put customers at ease.
Educate customers: Advise your customers on how they can tell real debt-collector texts from fake ones. Ask them to check whether the Sender ID matches the company they’ve dealt with. Tell them to compare the invoice number and amount with their own records. Guide them about secure websites. If they’re still confused, reassure them that they can call your company’s official customer-service line.
SMS debt collection templates
To help you get started with SMS for debt collection, feel free to copy, paste and tweak our templates below, according to your requirements.Hi [Name]. Just a friendly reminder that your [Month] bill is due on [Date]. Pay early for peace of mind. Make a payment now: [URL]
Hi [Name], your payment of [Amount] is due today. Pay online or call us on [Number]. [URL]
Hi [Name], our records show that your payment of [Amount] is now overdue. Please pay asap to avoid your account going into arrears. Pay online: [URL]
Urgent! Your payment of [Amount] is now overdue by [Number] days. To avoid damage to your credit rating, make a payment now. [URL]
Hi [Name], we need to inform you that your account is now in default, and we are passing your debt to a collections agency.
Hi [Name], we’ve tried to contact you multiple times to request payment. The next step is court proceedings. Further details to be sent by post.
Hi [Name], we’ve written a blog about the effects late payments can have on your credit score. Read it here. [URL]
Use Messente to supercharge your debt collection efforts via SMS
If your customers aren’t paying, SMS is an excellent tool to have in your arsenal to help you recover debts.Text messages are convenient, fast and direct. And they can make customers feel more comfortable too – no one likes being chased down for payment, and debt collection phone calls can feel somewhat discomforting. SMS can enhance your debt collection processes to improve cash flow, increase customer satisfaction and help you meet financial objectives.
Ready to recover more revenue with less hassle? Explore Messente’s robust SMS service for debt collection. Whether you choose our developer-friendly API or our intuitive online dashboard, you’ll have everything you need to stay compliant, protect your reputation, and get paid faster.
Getting started couldn’t be easier – talk to our sales team today!
