What is dunning?
Dunning is the process of contacting a customer about an overdue invoice in a planned sequence, each step firmer than the last, until it is paid, disputed or handed to a person. A dunning ladder fixes the day and the channel of each step in advance, so every overdue invoice is chased the same way, on time.
How a dunning ladder runs
A common ladder has 4 rungs, each set by days past the due date, and a disputed invoice leaves the ladder rather than climb it. A failed card payment is retried on its own schedule, with a request to update the card.
- Day 1
A reminder
The morning after the due date: a plain note with the invoice attached and a way to pay. - Day 7
A second notice
Firmer, restating the amount and the date it fell due. - Day 21
A statement to accounts payable
Sent to the customer's accounts payable contact and listing every open invoice, since the person who received the invoice may not be the one who pays it. - Day 45
A named owner
A person on the finance team takes the account and calls.
A worked example
In the illustrative June 2026, $203,500 of Gloaming Fescue Inc's receivables went past due across 14 invoices, and the ladder ran on each one.
| Operation | Line | Figure |
|---|---|---|
| Paid after the day 1 reminder | $89,500 | |
| + | Paid after the day 7 second notice | $48,800 |
| + | Paid after the day 21 statement | $28,500 |
| = | Cleared without a person, 82% | $166,800 |
| + | With a named owner from day 45, 8% | $16,300 |
| + | Still open, 10% | $20,400 |
| = | Past due in June | $203,500 |
Two invoices reached a named owner at day 45: Nuthatch Percale Inc's and Whinchat Poplin Inc's.
Common mistakes
Keeping a disputed invoice on the ladder
Reminders on an invoice the customer disputes harden the dispute. Keelson Coppice Inc's, billed at 64 seats against a contract of 58, left the ladder for a credit note and re-entered at day 1 when re-issued.Counting from the invoice date
The ladder runs from the due date. A reminder inside the customer's payment terms reads as an error, not a nudge.Writing every rung to the same person
By day 21 the person who received the invoice may not be the one who pays it, so the statement goes to the customer's accounts payable contact.
How Verlix handles it
Once you turn it on, the Collections agent runs the ladder on every overdue invoice from the morning after it falls due, and hands a person only the cases that need a decision. A disputed invoice leaves the ladder and goes to billing to resolve.
Accounts receivable automation and dunningRelated terms
DSO
How many days of sales are still waiting to be collected.Deferred revenue
Billed or collected but not yet earned, a liability until the work is done.