What is dunning? The dunning process explained (+ schedule)

Dunning is simply the systematic process of chasing overdue invoices — a planned sequence of reminders that escalates in firmness until you're paid. The word sounds formal, but the idea is plain: instead of chasing whenever someone remembers, you follow the same predictable steps every time. Done as a system rather than ad-hoc, it collects far more and feels far less awkward.

What does dunning mean?

Dunning is the systematic process of communicating with customers to collect overdue payments. In practice it means a repeatable series of reminders — emails, letters, and sometimes calls — sent on a set schedule after an invoice falls due, each a little firmer than the last. It is the structured alternative to chasing at random.

The term is old — “to dun” has meant to persistently demand payment for centuries — but the modern meaning is narrow and useful. When finance teams talk about a dunning process, a dunning letter, or a dunning schedule, they mean the planned cadence of collections communications for an overdue account. You'll also hear it called the reminder process, the chasing process, or simply collections follow-up— they all describe the same thing.

The key word is systematic. A single “just checking in” email isn't dunning; a defined sequence that every overdue invoice moves through, in the same order, regardless of who's busy that week, is.

What's the difference between soft and hard dunning?

Soft dunning is the early, friendly stage — gentle reminders that assume an honest oversight and protect the relationship. Hard dunning is the late, formal stage — firm, dated notices that reference consequences like statutory interest or escalation. Most small B2B suppliers should stay in soft dunning as long as possible and only harden the tone when reminders are genuinely ignored.

Soft dunning

Soft dunning covers the first touches: a courtesy note before the due date, a gentle nudge on or just after it, and a polite follow-up a week or two later. The tone assumes the best — that the invoice is sitting in an approval queue or behind a missing PO number, not being refused. The goal is to make paying effortless and to keep the working relationship intact, because most overdue invoices are oversights, not disputes.

Hard dunning

Hard dunning is what you escalate to only when the soft stage hasn't worked. The language becomes formal and dated — a final notice, a clear deadline, a reference to your right to charge statutory interest and recovery costs, and a stated next step if payment still doesn't arrive. It's firmer, but it should never be hostile. The aim is still to get paid and, ideally, keep the client — just with the seriousness the stage warrants.

For a small service company, the practical rule is to let the calendar harden the tone gradually rather than jumping to hard dunning at the first late day. A predictable escalation feels fair to the customer and keeps you from making an emotional call in the moment.

What does a sample dunning schedule look like?

A typical dunning schedule starts a few days before the due date and escalates over roughly six weeks: a courtesy reminder before due, a gentle nudge at due, firmer follow-ups around 7 and 14 days overdue, a formal notice near 30 days, and escalation beyond that. The exact days matter less than keeping the sequence consistent and proportionate.

This is the shape, not a script. For ready-to-send wording at each stage — from the pre-due nudge to the final notice — see our payment reminder email templates, which map directly onto the steps above. Notice that the first two-thirds of the schedule are soft dunning; you only reach hard dunning if the earlier reminders go unanswered.

How do you set your dunning cadence?

Set your dunning cadence by fixing the timing, channel, and tone of each step in advance, then applying it to every overdue invoice the same way. Decide how many touches you'll send, when email gives way to a phone call, and where the formal notices sit — so the schedule, not your mood, decides how hard to push on any given day.

• Frequency.Space reminders so they're noticeable without becoming noise. Something near weekly while an invoice is freshly overdue, easing off once you've sent a final notice, works for most small suppliers. Repeating the same email daily only trains people to ignore you.
• Channels.Email carries the routine reminders and leaves a written record. A short, polite phone call is the most effective single step once an invoice is two-plus weeks overdue — it surfaces disputes fast and signals you're paying attention. Reserve formal letters for the final stages.
• When to call vs email. Email early, call when email stops working. A call around the 14-day mark, or the moment a promised payment date is broken, usually moves things faster than another written reminder.
• Consistent and proportionate.Apply the same cadence to every customer and let the tone escalate with the calendar. Proportionate means the firmness fits how late the invoice is — not how frustrated you happen to feel.

If you want to think about cadence as part of a wider routine rather than a one-off, our credit control process for small businesses puts dunning in the context of terms, invoicing, and risk-watching.

Should dunning be manual or automated?

Manual dunning works until it doesn't — it relies on someone remembering to chase, so reminders slip the moment the team gets busy, which is exactly when invoices need chasing most. Automated dunning keeps the cadence consistent without depending on memory. The safe middle ground is to automate the schedule but keep a human approval step before anything reaches a customer.

The reason manual processes break isn't carelessness; it's that follow-up is invisible, repetitive work that always loses to billable work. A spreadsheet of due dates needs a person to check it, and the weeks you forget are the weeks your DSO quietly climbs. Automation removes the “did anyone chase this?” question entirely.

But fully hands-off automation has its own risk: a tone-deaf reminder fired at your biggest client on the wrong day can cost you more than the invoice. That's why the strongest setup automates the timing and drafting while leaving a review step for the sending— consistent by default, but never on autopilot for an account you'd rather handle personally. For the full picture of what a system can take off your plate, see our accounts receivable automation guide, and compare purpose-built tools on the invoice collection software page.

How does dunning relate to your statutory rights?

In the late stages of dunning, you can reference your statutory rights as a supplier. Across the EU, businesses are generally entitled to charge statutory interest on overdue B2B invoices plus a fixed recovery fee — commonly €40 — once a payment is genuinely late. Mentioning these rights in a final notice adds legitimate weight without making the message hostile.

This belongs to hard dunning, not soft. Raising interest and fees in a friendly early reminder reads as aggressive; raising them in a dated final notice, after several ignored reminders, reads as reasonable. You can put a concrete number on the interest and fee for any overdue invoice with our late payment calculator, which makes the figure you cite specific rather than vague.

This is general information, not legal advice — the exact rates, thresholds, and notice requirements vary by country, so confirm your local rules before charging interest or sending a formal demand.

The bottom line

Dunning is just chasing overdue invoices as a system instead of a scramble: a predictable schedule that starts soft, hardens gradually, and escalates only when reminders are ignored. Fix the timing, channels, and tone in advance; stay in soft dunning as long as the relationship allows; and reach for statutory interest and the €40 fee only in the late, formal stages. Whether you run it from a spreadsheet or automate it with an approval step, the thing that actually gets you paid — without becoming the company everyone dreads hearing from — is consistency.