Handling failed customer payments
We send out invoices for our hosted server monitoring service, Server Density, on the 1st of each month. Invoices are in arrears – i.e. you pay for your usage in the previous month. Five days later, we actually bill the customer’s card on file.
If payment fails for any reason, we notify the customer automatically and then reschedule the payment for 3 days time to allow for updates to cards, etc. If payment fails again, then a case is created in our support system and someone follows up manually.
Last month, we suspended accounts immediately on the 2nd failure but this month we provided 24 hours to contact us about the payment, with a further final notice the day of suspension, something we didn’t do last month. This seems like a much better idea as it is friendlier to customers and we’ve had more communication with explanations (even after the final warning).
Personally, I would always ensure my card is working after the first failure notification, and indeed the majority of our customers do this (or their card works first time). But there are some who wait until the 4th e-mail to do anything about it – perhaps a cashflow strategy, or just forgetfulness. Either way, when you’re providing a service that can be critical to your business then that extra grace period seems to be appreciated.
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