Dunning is the structured process of reminding customers about invoices that are due or overdue, with each reminder firmer than the last. A dunning ladder sets when each step happens, for example a courtesy note before the due date, reminders after it, then escalation to a manager or a credit hold.
What is dunning?
Dunning is a planned sequence of reminders for unpaid invoices. Instead of ad hoc calls when someone notices a late payer, every overdue invoice moves through the same stages on the same days, and every contact is recorded.
It sits between invoicing and any write-off in the accounts receivable cycle, and it works from the aging report: which invoices are how many days past due.
How does a dunning process work?
| Stage | When | Tone and channel |
|---|---|---|
| Courtesy reminder | 7 days before the due date | A friendly email with the invoice attached |
| First reminder | 3 days after the due date | A polite email with the amount, the due date and how to pay |
| Second reminder | 15 days after the due date | A firmer email and a phone call from the collector |
| Final notice | 30 days after the due date | A letter from the finance manager, warning of a credit hold |
| Escalation | 45 days or more | A credit hold, a payment plan or legal advice, decided by a person |
Pause the ladder for an invoice under dispute, a promised payment date or an agreed payment plan, and restart it if the promise is broken.
What does dunning look like in practice?
Why does dunning matter?
Consistent reminders shorten days sales outstanding without extra effort per invoice, and customers learn that due dates are real. The record of every contact also helps if the debt is later disputed or provided for.
Good dunning needs clean data. Apply receipts before each run through cash application, so no customer who has paid gets a reminder, and keep contact details current. Write in the language the customer uses, which for many GCC customers means Arabic or English.
Keep the last steps with people. Credit holds, payment plans and legal action affect the relationship and need judgement.
Questions people ask
How many steps should a dunning process have?
Many teams use three to five: a courtesy note before the due date, one or two reminders after it, a final notice and an escalation. A few clear steps with a defined end work better than many soft ones.
Should dunning stop when a customer disputes an invoice?
Yes, for the disputed invoice. Record the dispute, resolve it or reject it with reasons, and restart reminders once it is settled. Keep the ladder running for the customer's other invoices.
Is dunning the same as debt collection?
Dunning is the company's own reminder process. Passing a debt to an external collector or a lawyer is a later step, decided by a person, after dunning has not worked.