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Using SMS for payment arrears

Using SMS for payment arrears

SMS is used increasingly for different business purposes. Companies are becoming more creative about how they can use SMS and are constantly experiencing the benefits of this communication medium. An SMS reminder can, for example, also have a positive effect on the behaviour of people with payment arrears.

Financial problems
Earlier research has shown that people with financial problems benefit from receiving reminders. People who are in financial difficulties often experience stress and have a lot on their mind. This makes it easier to forget paying an invoice (on time), because it has simply slipped their mind. Sending an SMS simply reminds them to pay their invoice and prevents them from more financial turmoil.

The lectureship of Poverty Interventions at the Amsterdam School of Applied Sciences has carried out an investigation in collaboration with housing establishment The Key. The purpose of this research was to find out what the effect of a reminder per SMS would be on the payment behaviour of a tenant with rent arrears. Payment and rent arrears are not only detrimental to the tenants; rent arrears also result in time-consuming and costly extra work for housing corporations.

Tenants who received an SMS reminder proved to have paid their rent more often than tenants who did not receive an SMS. Attaching an iDEAL payment link to the SMS, making it as easy as possible for them to pay their rent, also had a positive effect. However, the payment behaviour was also influenced by a number of factors. For example, sending an SMS has more effect in certain city neighbourhoods than in other areas. The payment behaviour of tenants is also variable in different months of the year. In addition, sending out SMS more frequently did not immediately lead to a better result.

“Reminders by SMS can be effective to notice tenants to pay on time (with proactive SMS), or to pay as soon as possible if the payment date has been due (with a reminder SMS).”

Sending an SMS reminder can ensure good business results. In addition to the existing SMS applications, there are numerous ways in which SMS can be used. Currently many financial service providers use Spryng’s SMS services for Machine-to-Machine communication, SMS authentication, payment reminders, direct debits and notifications regarding the status of requests and claims.

Would you like to brainstorm with Spryng about the possibilities of using SMS within your company? Feel free to contact us, no strings attached! Call us on +32 (0)2 588 19 31 or send an e-mail to Spryng’s support team are available 24/7!

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