Dunning
The process of systematically following up on overdue payments through a series of increasingly urgent communications.
Definition
Dunning is the systematic process of communicating with customers to collect overdue payments. It typically involves a series of escalating communications: friendly reminders, formal notices, final warnings, and ultimately collection action or service termination.
Effective dunning sequences balance persistence with relationship preservation. Early communications are friendly and helpful; later ones become more formal and urgent. Automation enables consistent dunning without consuming staff time, and clear policies ensure fair, equal treatment of all accounts.
Why It Matters
Consistent dunning significantly improves collection rates. Many late payments aren't intentional—customers forget, misplace invoices, or have temporary cash flow issues. Systematic follow-up keeps your invoice top-of-mind and prompts action.
Dunning automation also ensures consistency. Without systems, some accounts get followed up aggressively while others slip through cracks. Automated dunning treats all customers equally and never forgets to follow up.
Examples
- 1
A dunning sequence: Day 1 (due date reminder), Day 7 (overdue notice), Day 14 (urgent: payment required), Day 30 (final notice: collection/suspension warning).
- 2
A SaaS company's dunning for failed subscription payments includes 3 retry attempts and 4 email notifications before account suspension.
- 3
A B2B company escalates dunning from automated emails to personal phone calls at 45 days overdue.
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