How Can You Automate Your Dunning Letter Process

The practice of dunning involves organisations attempting to retrieve money that their clients owe them. In the English language of the 17th century, it came from the verb "dun," which meant "to demand payment of a debt."

In the modern day, there is a prescribed process that must be followed when contacting a customer who is in default to collect payment. We will try to cover the same as well how automating the process helps in a much for efficient system.


When an invoice is not paid on time, a debtor receives a written payment demand known as a "dunning letter." It serves to inform the debtor that legal action will be taken if the payment is not made by a certain date and that the payment is past due.

You may send the debtor up to three such letters as a business. After you submit the first dunning letter, you have the option to decide to start legal dunning procedures right away.


An organisation is entitled to send the first Dunning Letter as soon as the payment deadline is missed for an invoice but in B2B where the buyer-seller relationship is usually long term, the sellers don’t initiate the 1st letter immediately after the due date


While it’s advisable to draft the dunning letter by someone who’s legally competent,  it can be done by anyone till the time they keep in mind the details that the Dunning Letter needs to contain to ensure that subsequent legal proceedings can be taken against the defaulting party. You can also automate your Accounts Receivable Process and use platforms like Inebura that comes pre-loaded with Legally Validated Dunning Letter Templates.


At the very least, the letter should include the following fundamental information:

  • The title "Dunning Letter"
  • Invoice Number
  • Notification of Payment Delay
  • Original Payment Deadline
  • New Due Date Deadline
  • Dunning and Late fees (optional).
  • Outstanding Balance (including the whole amount as well as any fees and interest)
  • Contact Person Details from the Buyer Side

Automating the Dunning Communication can significantly improve efficiency and recovery rates.


1. Choose the Right Software

2. Segment Customers

Classify customers based on their payment history and overdue periods (e.g., 30, 60, 90 days overdue). This allows for tailored communication strategies.

3. Design Dunning Campaigns

Create the timeline strategy for the 3 letters that are to be sent i.e. decide at what interval the 3 letters are to be sent in case of nonpayment after delivery of each letter. Else you can also use the pre-loaded strategy if your automation tool allows the same.

4. Set Up Email Templates

Prepare email templates for each stage of the Dunning Process. Ensure they are clear, professional, and include the above fundamental information, or else you can use the
pre-loaded templates if your automation tool allows the same

5. Implement Automation Workflows

Using your chosen software, set up workflows that trigger these emails automatically based on pre-defined criteria, such as:

  • Invoice Date: Send reminders a certain number of days after the invoice due date.
  • Payment Status: Trigger reminders based on payment status changes.

6. Personalize Communication

Ensure the automation tool allows for personalization tokens, such as the customer’s name, invoice number, and specific amounts due, to be included in the emails.

7. Provide Easy Payment Options

Ensure that each communication includes a direct and easy way for customers to pay, such as:

  • Payment Links: Direct links to online payment portals.
  • Payment Plans: Options for setting up instalment plans if applicable.

8. Compliance & Legal Considerations

Ensure that your Dunning process complies with all relevant laws and regulations regarding debt collection and customer communication

By following these steps and leveraging modern automation tools, you can create a robust and efficient Dunning communication process that helps your business in several ways as enumerated below

1. Increased Efficiency

  • Time Savings: Automation eliminates the need for manual follow-up, freeing up time for your finance team to focus on more strategic tasks.
  • Consistent Communication: Ensures that reminders are sent out consistently and on time, reducing the likelihood of missed follow-ups.

2. Enhanced Accuracy

  • Minimized Errors: Automation reduces the risk of human error in the dunning process, such as sending reminders to the wrong customers or incorrect amounts.
  • Up-to-Date Information: Automatically pulls the latest data from your accounting system, ensuring that the reminders contain accurate and up-to-date information.

3. Cost Savings

  • Reduced Labor Costs: By automating routine tasks, businesses can lower the labor costs associated with manual follow-up and collections.
  • Lower Postal Costs: If reminders are sent via email, automation can significantly reduce the costs associated with printing and mailing physical letters.

4. Improved Customer Relationships

  • Professional Communication: Automated systems can ensure that all communications are professional and consistent in tone, helping to maintain good customer relationships.
  • Customizable Messages: Allows for personalization and customization of messages, making communications more relevant and engaging for customers.

5. Scalability

  • Handles Volume Easily: Automation can handle large volumes of overdue accounts without additional resources, making it scalable as your business grows.
  • Uniform Processes: Ensures that all customers receive the same level of attention and follow-up, regardless of the number of overdue accounts.

6. Better Tracking and Reporting

  • Audit Trails: Provides a complete audit trail of all communications sent, which can be useful for internal tracking and compliance purposes.
  • Performance Metrics: Offers insights into the effectiveness of your dunning process, such as response rates and payment recovery rates, enabling continuous improvement.

7. Improved Compliance

  • Adherence to Regulations: Automated systems can be configured to comply with relevant debt collection regulations, reducing the risk of legal issues.
  • Consistent Application of Policies: Ensures that your credit and collections policies are applied consistently across all customers.

8. Reduced Stress for Staff

  • Streamlined Processes: Automation reduces the manual workload and stress on your finance and collections staff, leading to a more productive and satisfied team.

Automating Dunning Letters can significantly enhance the efficiency and effectiveness of your accounts receivable process. The benefits range from improved cash flow and cost savings to better customer relationships and compliance. By leveraging automation, businesses can ensure timely, accurate, and professional communication with customers, ultimately leading to healthier financial management.

To know more, write to us –


Sudarshan Banerjee

Inebura , Head of Product & GTM

Sudarshan Banerjee is a Product, Process and Automation professional. His areas of interest include Sales Force Automation Tools, Sales Process Construction, Data Science, Data Analytics, Statutory Audit and Compliance, Project Management and Change Management.

He has over 19+ years of experience in Business Development, Sales, Process Planning, Business Strategy and Product Development spanning across various domains namely ITeS, FMCG,Financial Services, Travel& E-com.