Dunning is the process of sending a planned series of reminders to customers with overdue invoices, escalating from a polite nudge to a firm final notice, so that late accounts are chased consistently and more invoices get paid. The word covers every channel you use to ask for money you are owed: email, SMS, letters and calls. A reminder is one message; dunning is the whole sequence behind it.
It matters because most late payment is not deliberate. An invoice gets buried, a contact leaves, an approval stalls. Steady dunning catches all of that early and keeps following up without anyone having to remember, which is why it sits at the centre of credit control. The alternative, chasing by memory in a busy week, is how good invoices quietly turn into bad debt.
A sequence, not a single chase.Dunning is a planned series of reminders that escalates as an invoice ages.
Tone and timing carry it.Start early and warm, firm up gradually, and switch channel when a message is ignored.
Automation makes it reliable.The sequence only pays off if it runs every time, which is why most teams automate it.
The dunning process is a timeline of touchpoints, each with its own purpose, wording and level of firmness. This is a sensible default for a 30-day invoice, which you can tighten for risky customers or relax for reliable ones.
A friendly heads-up that payment is coming, with the amount and a payment link. This alone prevents a surprising share of lateness.
A short, warm note that the invoice is due now. Assume good faith and keep paying a single click away.
Acknowledge it may be an oversight, restate the invoice number and amount, and ask for payment or a quick reply.
Switch from email to SMS or a phone call. Make clear the balance is now well past due and state what happens next.
A formal notice with a firm deadline, any late fee applied, and a clear warning of escalation if it is ignored.
Hand the account to your escalation process: a hold, a payment plan, or a collections agency.
The exact days matter less than the shape. You open early and soft, contact often enough that nothing slips by, change channel when a message is ignored, and firm up step by step. Running this by hand is where most teams fall down, because it is repetitive and easy to skip. Automated email and SMS reminders fire each step on schedule, so every customer gets the right message on the right day.
A dunning letter or dunning email is a written reminder that an invoice is overdue, asking the customer to pay and stating what happens if they do not. It is the unit the whole process is built from. Early messages are warm and assume an oversight; later ones are firmer, reference the original due date and any late fee, and spell out the next step. The final letter in the run is usually called a final demand or final notice. A good dunning message always covers the same essentials.
The invoice number and amountState exactly which invoice and how much, so there is nothing to look up or query.
The original due dateRemind them when it was due and how many days it is now overdue.
A one-click way to payInclude a payment link or details so settling the balance takes seconds.
Tone matched to latenessWarm and assuming an oversight early, firmer and more formal as it ages.
The next step, stated plainlySay what follows if it stays unpaid, whether a late fee, a call or escalation.
An invitation to replyAsk them to get in touch if something is wrong, so a dispute surfaces instead of festering.
You do not have to write these from scratch each time. A small library of templates, warming through to firm, keeps the wording consistent and lets the system send the right one automatically. Our invoice reminder email templates are a ready starting point you can adapt to your own voice.
The word dunning dates from 17th-century England and means to persistently demand payment of a debt. The most common account traces it to the surname Dun, said to belong to a bailiff well known for collecting on stubborn debts, so that to "dun" someone became shorthand for chasing them for money. Whatever the precise origin, the sense has stayed remarkably stable for four hundred years: a dun was a persistent demand for payment, and dunning is still exactly that, only now it travels by email and SMS rather than a knock at the door. The constant is persistence applied politely and repeatedly, which remains the whole point.
Dunning is the routine, automated chasing of overdue invoices through reminders, while collections is the wider function that takes over when dunning has run its course and an invoice still has not been paid. They nest inside each other: dunning handles the bulk of late payments politely and at scale, and collections deals with the few accounts that survive it.
| Aspect | Dunning | Collections |
|---|---|---|
| What it is | Routine, automated reminders on overdue invoices. | The wider function for debts the reminders did not recover. |
| When it runs | From before the due date through the final demand. | After the dunning sequence is exhausted. |
| Typical actions | Email and SMS nudges, escalating tone, late fees. | Negotiation, payment plans, legal action, an agency. |
| The goal | Stop most debts going bad in the cheaper, friendlier stage. | Recover the few that go bad anyway. |
Put simply, dunning is how you stop most debts going bad, and collections is how you deal with the few that do anyway. A well-run dunning process keeps as much as possible in the cheaper, friendlier first stage.
Neither Xero nor QuickBooks runs a full dunning sequence on its own. Both can send a basic reminder, but they do not escalate tone, switch to SMS, apply a late fee or stop automatically the moment an invoice is paid. That gap is where dunning software sits. A tool connected to your ledger watches which invoices are due or overdue, fires each step of the sequence on schedule across email and SMS, firms up the tone as the balance ages, and ceases the instant payment lands so no one is chased for cleared debt. Paidnice runs the whole dunning cycle on top of Xero and QuickBooks, which means the process actually runs every time instead of whenever someone gets to it.
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