Dunning
The process of communicating with customers to collect overdue payments.
Definition
Dunning is the systematic process of contacting customers about overdue invoices through escalating reminders. Typically: friendly reminder at 7 days overdue, firm notice at 14 days, final notice at 30 days, then collections or legal action.
Effective dunning balances persistence with customer relationships. Automated dunning workflows send timely reminders without manual effort, improving collection rates while maintaining professionalism.
Why It Matters
Most late payments aren't intentional—customers forget or lose invoices. Consistent dunning dramatically improves collection rates. Businesses with automated dunning collect 20-30% faster than those relying on manual follow-up.
Poor dunning damages cash flow and customer relationships. No follow-up signals you don't care about payment. Overly aggressive dunning alienates good customers with temporary issues.
Examples
- 1
Dunning sequence: Day 3 before due—friendly reminder. Day 7 past due—payment request. Day 21—final notice with late fees. Day 30—collections.
- 2
SaaS dunning for failed credit card: email immediately, retry charge in 3 days, suspend account at 7 days, cancel at 14 days.
- 3
B2B dunning: polite email reminder, phone call at 14 days, executive-to-executive call at 30 days, legal demand letter at 45 days.
Related Calculators
Apply this concept with our free calculators
Related Terms
Quick Navigation
Ready to put this into practice?
InvoiceLaunch automates invoicing with built-in payment terms, late fees, and more.
Get Started