What is Dunning?
Dunning is the systematic process of following up on unpaid invoices to collect payment. Learn how to build an effective dunning strategy, what to say in payment reminders, and how automation can recover lost revenue.
What Is Dunning?
Dunning is the formal term for the systematic process of following up with clients who have unpaid or overdue invoices. It encompasses everything from a friendly "just a reminder" email to formal collection letters and final demands. The word comes from the Old English "dun" meaning "to demand" — and that's exactly what it is. Polite, professional, persistent demands for payment. Dunning is not harassment. It's a structured, respectful process that: 1. Reminds clients who may have simply forgotten 2. Gives them an opportunity to communicate about disputes 3. Escalates appropriately when initial reminders fail 4. Preserves the business relationship where possible
Why Dunning Matters
The numbers don't lie: - 40% of invoices paid late are paid only after a reminder - The likelihood of collecting a debt drops 50% after 90 days overdue - 90% of collections success happens in the first 30 days after due date If you're not dunning systematically, you're leaving money on the table. And if a client is having financial trouble, early communication gives you options — payment plans, partial payments, credit holds — that you lose if you wait too long.
The Dunning Schedule
A typical dunning sequence looks like this: | Stage | Timing | Tone | Action | |---|---|---|---| | 1. Friendly reminder | 1 day overdue | Casual, helpful | "Just a heads up — Invoice #X is past due" | | 2. Second reminder | 7 days overdue | More direct | "Invoice #X for $X was due [date]. Please prioritize." | | 3. Third reminder | 14 days overdue | Firm | "Payment is now significantly overdue. Please respond." | | 4. Phone call | 21 days overdue | Firm but professional | Personal call to discuss | | 5. Final notice | 30 days overdue | Formal, last chance | "Final notice before collection or legal action" | | 6. Collection/ legal | 60-90 days | Formal | Referral to collection agency or attorney | Important: Never skip from "friendly reminder" to "lawsuit threat." Escalation must be gradual.
Writing Dunning Messages
Stage 1: Friendly Reminder (1 day overdue) > Subject: Quick reminder — Invoice #247 is due today > > Hi [Client Name], > > This is a friendly reminder that Invoice #247 for $3,200 is due today. You can view and pay it here: [link] > > Let me know if you have any questions! > > [Your Name] Stage 3: Third Reminder (14 days overdue) > Subject: Invoice #247 — [Company Name] — Payment Overdue > > Hi [Client Name], > > Invoice #247 for $3,200 was due on March 5. As of today, it is 9 days past due. > > If there is an issue with the invoice or the work, please let me know immediately so we can resolve it. If payment has been sent, please share confirmation so I can update our records. > > Otherwise, please prioritize this payment within the next 5 business days. > > [Your Name] Stage 5: Final Notice (30 days overdue) > Subject: FINAL NOTICE — Invoice #247 — Immediate Payment Required > > Dear [Client Name], > > Invoice #247 for $3,200 (due March 5) remains unpaid. This is the final notice before further collection action. > > Payment must be received within 5 business days or we will need to engage a collection agency or pursue legal remedies to recover the outstanding balance. > > Please contact us immediately to arrange payment or discuss a resolution. > > Regards, > [Your Name]
Automating Dunning with Software
Manually tracking and sending dunning emails is time-consuming and error-prone. Dunning automation handles it for you: 1. Set the schedule — Define when reminders go out (1 day, 7 days, 14 days, etc.) 2. Write the messages — Create templated messages for each stage 3. Automate sends — Software sends reminders automatically 4. Track responses — Monitor which clients are responding and which are not 5. Escalate manually — You step in for the difficult cases Eonebill and similar platforms have built-in dunning automation that handles the entire sequence.
Dunning Best Practices
1. Be human — Most late payers have a reason (forgot, cash flow issue, dispute). Kindness often works better than aggression. 2. Escalate gradually — Never jump to legal threats on day 2. 3. Document everything — Keep records of all communications. 4. Know when to stop — After 90 days of non-payment, the likelihood of collection drops sharply. Cut your losses and move on. 5. Set clear expectations upfront — A strong payment policy in your contract reduces dunning frequency.
The Bottom Line
Dunning is the discipline that separates businesses that get paid from those that don't. Implement an automated dunning schedule from day one — and follow it consistently. Most late payments are resolved with polite persistence, not aggressive tactics. (Automate your dunning →) (Speed up payment →) (Manage AR properly →) Key Takeaways: 1. Dunning = systematic, polite follow-up on overdue invoices 2. A dunning schedule escalates from friendly reminder to final notice over 30 days 3. 40% of late invoices are paid only after a reminder — dunning works 4. Automate dunning with your invoicing software to ensure consistency 5. Document all communications and know when to escalate or write off Stop chasing payments manually — Try Eonebill Free Eonebill's automated dunning sequences send the right message at the right time — so you get paid faster without the awkward conversations. View Pricing → | Glossary Home → | Home →