Dunning Explained
Dunning is the systematic process of contacting customers with past-due invoices to collect payment. The term dates back centuries and originally referred to persistent demands for payment. In modern B2B finance, it refers to a structured escalation sequence: from gentle reminders to formal demand letters to legal action.
Effective dunning is the core operational process behind accounts receivable management. It determines how quickly overdue accounts are addressed, how many touchpoints occur before escalation, and what tone and channel is used at each stage.
The evolution of dunning has been significant: traditional dunning relied on manual email templates and phone calls. Modern dunning uses AI agents that automatically trigger at each stage, make outbound phone calls, conduct real-time negotiations, and route difficult accounts to attorneys — all without human intervention.
What You Need to Know About Dunning
- Timing is the most important variable. The first contact within 7 days of a missed payment doubles recovery rates versus waiting 30+ days.
- Multi-channel outreach is more effective than email alone. Combining email + phone increases response rates by 4-6x compared to email sequences only.
- Tone should escalate gradually. Start with "friendly reminder," escalate to "formal notice," never start with threats.
- A good dunning sequence never stops. Each step has a predefined trigger: no response after X days moves automatically to the next escalation level.
- Legal escalation is a legitimate dunning step. Attorney demand letters are highly effective — many customers pay immediately upon receiving a letter with a bar number.
A Standard B2B Dunning Sequence
Due Date — Courtesy Reminder
Invoice is due today. Send a brief, friendly reminder email. Assume good faith — busy customers often miss due dates.
7 Days Past Due — Follow-Up Email + First Call
More direct follow-up. First outbound phone call. Ask if there's an issue with the invoice or delivery that's holding up payment.
14 Days Past Due — Second Call + Escalation Warning
Call again. Email references consequences of continued non-payment. Offer payment plan if needed. Escalate internally if no response.
30 Days Past Due — Formal Notice
Written formal demand. References specific invoice details, amount owed, days overdue, and next steps. Sets a clear deadline.
60 Days Past Due — Attorney Demand or Agency Escalation
Account escalated to attorney-sent demand letter or professional collection agency. Legal action becomes explicit possibility.
How AI Has Changed Dunning
| Dimension | Traditional Dunning | AI Dunning (AgentCollect) |
|---|---|---|
| Channels | Email only (maybe manual calls) | Phone + Email + SMS |
| Speed of first contact | Next business day (if remembered) | Day 1 past due, automatic |
| Negotiation | Requires human AR rep | AI agent negotiates payment plans live |
| Scale | Limited by headcount | Unlimited — every account, every day |
| Consistency | Depends on who's following up | 100% — every account gets the same process |
How AgentCollect Automates Dunning
AI Agents That Call, Negotiate, and Escalate
AgentCollect's AI agents execute a full dunning sequence automatically — starting with a phone call on day 1 past due and escalating through emails, follow-up calls, and attorney demands based on account response. No human intervention required unless you want it.
Unlike email-only dunning sequences, AgentCollect agents have real conversations. They can answer questions about the invoice, handle disputes, offer payment plans with agreed-upon terms, and route to a human or attorney when needed. The result is a dunning process that runs 24/7 at the scale of your entire AR portfolio.
Related AR Glossary Terms
Dunning FAQ
Still running manual dunning sequences?
AgentCollect automates your entire dunning process — phone calls, emails, payment plans, and attorney escalation. All under your brand.
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