Dunning Message

Types of Dunning Messages

A Dunning message (also referred to as a Dunning notice, or Dunning letter) usually takes the form of email communication these days, but they’re not the only method available. Dunning outreach can take several forms:

  • Email: This is the most common method due to its ease of deployment, repeatability, and ability to include links to streamline payment collection.
  • Phone: Creditors may contact clients directly by phone, though calls are usually reserved for delinquent accounts that may soon be sent to collections.
  • Physical letters: Though considered old-fashioned by modern standards, some industries still prefer to send hard copies of Dunning notifications to physical addresses.
  • Fax: Businesses that still rely on faxing for communication may receive faxed Dunning notifications in lieu of physical letters or emails.
  • Text: Some companies may send an SMS text reminder to overdue clients as a quick and simple way of making contact.

Most businesses use a variety of these strategies in tandem to reach customers, as a strategic Dunning process will need to remain flexible enough to reach customers through their preferred contact methods.

A Typical Dunning Message Example

Dunning messages don’t need to be—and shouldn’t be—overly complicated. Their goal isn’t to persuade. Their mission is to update clients quickly and efficiently. A typical Dunning email will address the reader, note their delinquency, detail the agreed-upon payment terms, and request a remittance.

Additionally, a Dunning message may include a copy of the original invoice and additional details as befits the situation. A Dunning message for a first-time missed payment should look a little different than one sent to a chronically-late client.

It’s common for businesses to segment their Dunning outreach by 30-day periods, with unique templates for the 30-day, 60-day, and 90-day windows.

Here’s a quick Dunning template to illustrate how an early-stage email might look for an invoice that is just entering the 30-day late stage:

Hello [Client’s First Name],

We’re reaching out to confirm that you received our invoice on [Date Sent].

As of [Today’s Date], we have not received payment for the following invoices:

Invoice #      Amount Owed      Due Date

Currently, you have an outstanding balance of [Balance].

Please let us know if you have any questions about these invoices or our available payment options. You can reach our customer service team at [Contact Number].

Kind regards,

[Sender’s Name]

Note the pertinent details included here. The Dunning message begins with a friendly greeting (important to maintain customer relationships!) while delineating the invoice date, the date the Dunning message was sent, invoice numbers, amounts owed, and total balance. It also includes a simple contact number that customers can use without needing to look up your business information.

When crafting a Dunning message of your own, think of it in terms of marketing strategy. Like your other marketing materials, a Dunning email is crafted to solicit action from the viewer. Your goal is to improve cash flow by encouraging them to act, and the best way to do that is to make things as clear and straightforward as possible.

Setting Up a Standard Dunning Process

The above template details the standard Dunning email, but how does a company leverage it as part of a broader Dunning strategy? Use the following step-by-step framework for some quick tips:

  1. Establish a system for identifying late payments as early as possible.
  2. Plan a distribution schedule for Dunning message timing across intervals
  3. Create Dunning templates (like ours above) for each of your chosen timeframes
  4. Set up these templates within your A/R software to automatically deploy
  5. Maintain contact with customers who respond and make accommodations for them as needed

The Benefits of Dunning Management

The primary benefit of Dunning management—getting paid what you’re due—is obvious. But there are other systemic benefits that come with a codified Dunning management strategy, many of which can uplevel a company’s flagging accounts receivable process:

  • Improve payment rates and help companies hit their top A/R metrics
  • Streamline collections by way of adequately tracking how your inventory is converted into cash
  • Maintain better customer communication by keeping all parties in the loop
  • Minimize collection costs through streamlined, automated A/R solutions
  • Reduce the risk of legal fees or the need to sell debt to collections
  • Decrease bad debts and write-offs with a rigorous Dunning follow-up process

Of course, like many A/R processes, the full benefits of Dunning management can’t be realized without an efficient process to power them. In modern A/R, this means deploying automated accounts receivable solutions that make Dunning simple.

Within these tools, companies can store customer details, generate Dunning templates, set up automated message deployments, and coordinate all aspects of their customer outreach. These systems have progressed to the point where they’re viable solutions for nearly any business.

If your company is ready to explore the benefits of full A/R automation, contact us at Gaviti for a demo of our platform!

 

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