Dunning
Automated past-due follow-up that keeps the account
Dunning is the follow-up that happens after an invoice goes unpaid. LedgerUp runs it as a sequence: automatic reminders before and after the due date, escalation on a schedule you set, failed-payment retries, and a hand-off to a human the moment a customer disputes, promises to pay, or asks a question the sequence shouldn't answer on its own.
What dunning is
Dunning is the structured process of communicating with customers about overdue or failed payments — reminders, escalations, and retries — with the goal of collecting the balance without damaging the relationship. It differs from collections in scope: dunning is the automated sequence that runs on every open invoice, while collections is the broader function that includes dunning plus disputes, payment plans, escalation to account owners, and, at the far end, write-off or agency referral.
How a dunning sequence runs
The default shape of a B2B SaaS sequence. Every step, channel, and interval is configurable.
Pre-due reminder
A courtesy notice a few days before the due date, with the invoice and payment link attached. The cheapest collection you'll ever make is the one that never goes past due.
Due-date notice
Sent on the due date itself, confirming the amount and terms. For customers paying through an AP portal, this is also where a missing PO or a stalled portal submission surfaces.
Early past-due follow-up
Short, friendly, and assumes an oversight rather than a refusal — because at this stage it usually is. Sent to the AP contact with the account owner visible on the thread.
Escalation to the billing owner
If the invoice is still open after your first escalation window, the sequence widens to the customer's billing owner and loops in your account owner, with the aging and history summarized so nobody re-reads the thread.
Firm notice with terms
Further out, the tone shifts: the balance, how long it has been outstanding, the contractual payment terms, and any late fees or service implications your agreement provides for.
Human hand-off
A dispute, a promise to pay, a partial payment, or a question the sequence shouldn't answer pauses automation immediately and routes to a person in Slack with the full context attached.
Resolution and close-out
When payment lands, cash application matches it to the invoice, the sequence stops, and the outcome — days to pay, which step produced it — feeds back into how the next sequence is tuned.
What you configure
The controls that shape a sequence. Most teams start from the default and adjust segment by segment.
Sequence timing
How many days before and after the due date each step fires, and how long the sequence runs before it escalates out of automation entirely.
Segmentation
Different sequences by customer tier, balance size, payment terms, or risk — an enterprise account on Net 60 shouldn't get the same cadence as a self-serve account on Net 15.
Recipients and escalation path
Who receives each step: AP contact, billing owner, account owner, and when each is added to the thread rather than replacing the last.
Channel and tone
Email, Slack Connect, or a task for the account owner, and the escalation in tone from courtesy reminder to firm notice.
Failed-payment retries
For card and ACH failures, how many retry attempts, on what schedule, and which decline reasons are worth retrying versus routing to a human immediately.
Pause and exclusion rules
Conditions that stop the sequence — an open dispute, a promise to pay, an active renewal negotiation, a hold placed by the account owner.
Promise-to-pay tracking
When a customer commits to a date, the sequence pauses until that date and resumes automatically if the payment doesn't arrive.
Dispute capture
A disputed invoice is flagged with its reason and routed for resolution, so it stops accruing dunning steps that would only make things worse.
docs.ledgerup.ai
Open the dunning configuration guide
Sequence templates, per-segment timing, message customization, retry rules, and escalation routing are configured step by step on the docs site.
Go to docs.ledgerup.aiDunning FAQ
What is dunning?
Dunning is the structured process of following up with customers on overdue or failed payments — a sequence of reminders, escalations, and payment retries aimed at collecting the balance without damaging the relationship. It typically starts before the due date with a courtesy reminder and escalates on a fixed schedule as an invoice ages.
What is the difference between dunning and collections?
Dunning is the automated sequence that runs on every open invoice: reminders, escalations, and retries on a schedule. Collections is the broader function that contains it — dunning plus dispute resolution, payment plans, escalation to account owners and execs, and at the far end write-off or referral to an agency. Dunning handles the majority of invoices; collections handles what dunning can't.
How many dunning emails should a B2B SaaS company send?
Most B2B SaaS sequences run five to seven touches over 60 to 90 days, starting with a pre-due courtesy reminder and escalating from the AP contact to the billing owner to the account owner. B2B differs from consumer dunning in that the person receiving the reminder usually isn't the person who decided not to pay — so escalating to the right contact matters more than sending more messages to the same one.
Does automated dunning damage customer relationships?
It does when a sequence keeps firing at a customer who has already disputed the invoice, already paid, or already committed to a date — which is exactly what unmonitored automation does. LedgerUp pauses the sequence on a dispute, a promise to pay, or a partial payment and hands off to a person with the full context, so automation handles the routine follow-up and humans handle everything that isn't routine.
How does dunning handle failed card and ACH payments?
Failed payments get their own retry logic rather than the standard past-due sequence. Retries run on a configured schedule, and the decline reason determines the path: a temporary failure like insufficient funds is worth retrying, while a hard decline such as a closed account routes to a person immediately to get updated payment details.
What happens when a customer replies to a dunning email?
The reply is read and classified. A payment confirmation or a promise to pay pauses the sequence and records the committed date; a dispute is flagged with its reason and routed for resolution; a question that needs a real answer goes to the account owner in Slack with the invoice, contract, and aging attached. The sequence never continues on top of a live conversation.
How much does automated dunning reduce DSO?
LedgerUp customers report 60% faster collections and DSO down 15 days on average. The gain comes less from sending more reminders than from consistency — every invoice gets followed up on schedule, escalation reaches the right contact, and nothing falls through because the person who owned it was busy closing the month.
How does dunning work, step by step?
A B2B dunning sequence runs on a schedule keyed to the due date. A typical LedgerUp default: a courtesy reminder 3 days before due; a notice on the due date with the invoice and payment link; a friendly follow-up at 7 days past due to the AP contact; an escalation at 14 days that adds the customer's billing owner and your account manager to the thread; a firm notice at 30 days citing the contract terms and any late fees; and a hand-off to a person at 45 to 60 days to decide on a payment plan, a service hold, or agency referral. Payment, a dispute, or a promise to pay stops the sequence at any point. Every interval, recipient, and message is configurable per customer segment.
How many dunning emails should I send before escalating?
Three touches to the same AP contact is the practical limit. If the pre-due reminder, the due-date notice, and the first past-due follow-up have not produced a payment or a reply, sending a fourth email to the same inbox rarely does. Escalate on the fourth touch instead: add the customer's billing owner or finance lead and your own account manager to the thread, with the aging and history summarized. In B2B the person receiving the reminders is usually not the person who decided not to pay, so widening the audience works better than repeating the message.
How do I write a past-due invoice email that actually gets paid?
Make it easy to act on and impossible to misread. Subject line with the invoice number, amount, and status ('Invoice 1042 for $12,400 is 7 days past due'). First line states the fact and the ask. Then the invoice number, amount, original due date, and a payment link or remit-to details, followed by the PDF attached. One sentence offering to resolve any problem ('If there is a PO or a question holding this up, reply here and we will sort it out'). Sign it from a named person. Keep it under 120 words. Ari writes each message from the actual invoice and account history, so the details are always right and the tone matches how overdue the balance is.
What are the best dunning email templates for B2B SaaS?
Five messages cover the sequence. Pre-due (3 days before): 'A heads-up that invoice 1042 for $12,400 is due on the 30th; the payment link is below.' Due date: 'Invoice 1042 for $12,400 is due today.' First past-due (7 days): 'Invoice 1042 is now 7 days past due. Is there anything holding this up on your side?' Escalation (14 days, copying the billing owner and your account manager): 'Invoice 1042 for $12,400 is 14 days past due. We have not heard back on our previous notes; can you confirm the expected payment date?' Firm notice (30 days): 'Invoice 1042 is 30 days past due. Under the terms of our agreement, late fees apply from today and services may be affected. Please confirm payment by Friday or reply so we can agree a plan.' Every message carries the invoice, the payment link, and a named sender.
How do I escalate an unpaid invoice to the customer's management?
Escalate laterally before you escalate upward. First add the customer's billing owner or finance lead to the existing thread, with a two-line summary of the aging and the touches so far. If that does not move it within a week, your account manager or executive sponsor contacts their counterpart on the customer side directly, framed as resolving a blocker rather than as a collections demand. Keep the original thread and attach the invoice history. Ari drafts the escalation with the summary already written, and your account owner approves it in Slack before it is sent.
When should I pause a dunning sequence?
Pause on any signal that the next reminder would be wrong: the customer disputed the invoice or a line on it; the customer promised a payment date (pause until that date, then resume if it does not arrive); a partial payment arrived and the balance needs a person to look at it; a renewal or expansion negotiation is active; the account owner placed a hold; or the invoice is stuck in an AP portal and the fix is on your side. Ari pauses automatically on a dispute, a promise to pay, a partial payment, or a hold, and records why, so the sequence does not keep firing on top of a live conversation.
What are dunning best practices that do not damage customer relationships?
Start before the due date so the first message is a courtesy, not a demand. Send from a named person, never a no-reply address. Include everything needed to pay in every message. Escalate to a different person rather than repeating yourself to the same one. Stop the moment the customer replies, pays, or disputes. Match the tone to the aging: friendly through the first two weeks, firm only when the balance is genuinely delinquent. Segment: an enterprise account on Net 60 should not get the same cadence as a self-serve account on Net 15. And fix the upstream cause when the same customer is late every month, which is usually a PO or portal problem, not a willingness problem.
What is the best dunning automation software for B2B?
It depends on which layer you need. Billing engines such as Stripe Billing and Chargebee include dunning for failed card and ACH payments on subscriptions, which covers self-serve well and invoiced B2B contracts poorly. Collections tools such as Upflow, Chaser, and Tesorio run reminder sequences and AR dashboards on top of your accounting system. LedgerUp runs dunning as part of the whole billing workflow: Ari writes each reminder from the actual invoice and contract, submits to AP portals when that is what is blocking payment, reads and classifies replies, pauses on disputes and promises, escalates to the right people, and applies the cash when it lands, with your team approving anything sensitive in Slack.