What is a Dunning Letter?
A dunning letter is just a fancy way of saying: the email you send to a customer who is overdue on an invoice.
The first couple of dunning letters should be simple and cordial. All you have to say is something like this:
Hello Dan, This is just a friendly reminder that your invoice is past due. Please remit at your earliest convenience. Thank you!
If these go by unanswered, add some more urgency. Highlight the consequences of continued delays.
Something like:
- Your account is in jeopardy of losing “pay as you go” status
- Our late fees go into effect at the 45-day mark. If this remains unpaid, we will send an updated invoice with the charges reflected.
Ultimately it’s up to your business to decide when to turn the product/service off. But if it’s been 90 days without payment, it’s totally reasonable to bring this up as a possibility. Think about it, that’s a quarter of the year where your customer received the service on an interest-free loan. Don’t work for free!
Then last but least important, the word “dunning” originated in the 17th century as a slang term for following up on debt payments. If you’re looking to shine at a local trivia night, keep that piece of knowledge in your back pocket.
You’re welcome.
Other insights from FinanceFuel
Top Five Things to Put in an Invoice
Five Tips for Sending an Invoice
FinanceFuel is an accounts receivable management solution that automates manual tasks to collect payments 25–50% faster. You can learn more about FinanceFuel on our website or, if you’re interested in speaking directly with a member of our customer success team, send us a note (sales@financefuel.co) and we’ll get back to you right away.
