Dunning (collections follow-up)
What is Dunning? The series of reminders, each firmer than the last, sent to customers whose invoices are overdue.
In plain words
Dunning is the routine of reminding customers about overdue invoices in stages. The first message is a friendly nudge. Each later one is firmer, until a formal demand, and finally a last notice before legal action.
Most finance teams do this already, by phone and WhatsApp. Dunning simply makes it a fixed ladder, so every customer is treated the same way and nobody is chased twice on the same day.
An invoice of ₹1,18,000 was due on 5 April and is still unpaid. The days below are an illustration; you set your own.
| Days overdue | Step | Tone |
|---|---|---|
| 3 | First reminder with a copy of the invoice | Friendly |
| 15 | Second reminder asking for a payment date | Polite, direct |
| 30 | Formal demand quoting the agreed terms | Firm |
| 60 | Last notice before legal action | Formal |
If the customer pays on day 20, the ladder stops. The day-30 demand is never sent.
Why it matters
- Cash: reminders sent on a fixed schedule usually bring money in sooner than chasing when someone remembers.
- Relationships: a harsh message too early can lose a good customer; a soft one too late can lose the money.
- Control: one customer should hear from you once, not from the salesperson, the accountant and the owner on the same morning.
Want to see an overdue list turn into drafted reminders? Ask us to run it on a sample of your invoices.
How Kinnow handles it
The Collections agent works out how many days each invoice is overdue and drafts the reminder for that stage. The ladder has four steps: first reminder, second reminder, demand and legal. The days for each step are set in a collections rule you can change. A person approves each draft before it goes.
Only one reminder per customer is open at a time. The agent drafts and waits; when a receipt is posted against the invoice, the next run closes the reminder. At the demand and legal stages it proposes a credit hold alongside the notice. A person decides.
Limit: the agent is validated with each client before it works on their books, and the channels (email, WhatsApp, SMS) are set up with you. Kinnow drafts a legal notice; it does not send one on its own.
Tell us your usual credit terms and we will show how the ladder would look for your customers.
Questions
What is Dunning?
The series of reminders, each firmer than the last, sent to customers whose invoices are overdue.
How many reminders are too many?
There is no fixed rule. Many businesses use three or four steps. What matters is that the tone gets firmer with time, each customer is chased by one person at a time, and the chasing stops the day payment arrives. In Kinnow you set the days for each step.
Is a dunning letter a legal notice?
No. A reminder or demand letter is an ordinary business message. A legal notice is a formal step, usually sent through a lawyer. Take legal advice before you send one, and keep a record of the earlier reminders.