What Are Dunning Emails & How to Write Effective Ones (+ Examples)

Introduction

Overdue payments are a natural part of running a business, but they present an opportunity to engage with your customers positively. Dunning emails, when crafted thoughtfully, not only help recover payments but also strengthen trust and communication with your customers.

In this guide, we’ll walk you through everything you need to know about dunning emails from their importance to what they are and how to create them effectively. 

You’ll also find actionable tips and examples to make your payment recovery process seamless, efficient, and customer-focused.

What Is Dunning Email?

Dunning emails are reminders sent to customers about overdue payments, often automated to ensure timely follow-ups on unpaid invoices. These emails notify customers about pending payments, explain the reasons for failure (like an expired credit card), and provide steps to resolve the issue easily.

Normally sent as a series, dunning emails start with friendly reminders and gradually become more urgent to collect outstanding payments. The right tone, timing, and clarity are key to collecting payments without damaging customer trust.

Why Are Dunning Emails Important?

Sometimes, small issues like an expired credit card cause missed payments, which can affect revenue and the customer’s experience. An effective dunning management system helps by reminding customers to fix payment issues quickly, ensuring a smooth process for your business and customers. Here’s how it can help:

• Improving customer experience

Failed payments, whether due to expired cards, insufficient funds, or billing errors, can disrupt a customer’s access to your product or service. This often leads to frustration and loss of trust. Dunning emails solve these issues by notifying customers promptly and helping them take quick action, ensuring uninterrupted service and a better experience.

• Boosting customer retention

Payment issues can lead to involuntary churn, where customers leave simply because billing problems weren’t resolved. By clearly explaining the issue and guiding customers on how to fix it, dunning emails reduces churn and helps retain more customers. This proactive communication not only recovers payments but also strengthens your relationship with them.

• Streamlining automated collections

Manually following up on failed payments is time-consuming. Automated dunning emails simplify this process by sending timely reminders and encouraging customers to update their billing details. To keep it customer-friendly, always include contact information so customers can easily reach out for help if needed.

• Recovering revenue faster

Overdue payments can hurt your cash flow, but dunning emails provide a reliable way to recover that revenue. Automated reminders with clear calls to action increase the chances of resolving payment issues quickly and efficiently.

• Building trust and transparency

A polite and effective dunning strategy reassures customers that their relationship with your business is valued. By keeping your tone professional and solution-focused, you can recover payments without causing frustration or damaging trust.

This approach ensures that your payment recovery process is smooth, efficient, and customer-friendly.

When Should You Send a Dunning Email?

Timing is crucial for recovering payments while maintaining customer satisfaction. Dunning emails are most effective when sent at the right moment, addressing small payment issues before they escalate into bigger problems.

Here’s a list of scenarios about when to take action to maximize the impact of your dunning emails:

1. Before subscription renewal

Let customers know when their subscription is about to renew. A pre-dunning email helps them prepare for the charge, reducing declined payments. You can also use this email to upsell premium plans or highlight the added benefits of their current subscription.

2. Post payment failure

Send a dunning email right away if a payment fails due to reasons like an expired card, insufficient funds, or a bank decline. Include the amount due, why the payment didn’t go through, and a direct link to fix it. Offering multiple payment options makes it even simpler for your customers.

3. When billing information expires

If a customer’s payment details are about to expire, remind them to update their information. This ensures their service continues without interruption and helps prevent losing customers to billing issues.

4. To confirm upcoming charges

Keep customers informed by sending reminders about upcoming charges or asking them to verify billing details. This proactive approach avoids surprises and builds trust.

5. During a grace period

If you offer a grace period for overdue payments, use it wisely. Send reminders that gently escalate in urgency as the deadline approaches, but keep the tone polite and helpful.

6. As a final payment notice

If previous reminders haven’t worked, send a final notice with clear information on what happens next, such as account suspension or cancellation. You can also offer options like pausing the subscription or discounts to encourage resolution.

7. For bank declines

Sometimes banks block payments due to suspected fraud, insufficient funds, or other issues. Use a dunning email to explain what happened and guide customers on how to retry their payment. Include support contact details for a smooth process.

8. During technical payment issues

If a payment fails due to a technical glitch, let your customers know. Reassure them that the issue is being resolved and provide any necessary updates.

9. For payment policy updates

When you make changes to your payment terms or policies, communicate them clearly with your customers. If they need to take any action, such as agreeing to new terms or updating information, include simple instructions.

With the right timing and approach, dunning emails turn payment recovery into a seamless and positive experience for both you and your customers.

Steps to Write an Effective Dunning Email?

Creating a dunning email that gets results involves a clear, structured approach. Here’s how to write an effective dunning email that’s professional, actionable, and customer-friendly:

Prewriting: plan your strategy

1. Segment your overdue accounts:

Group accounts based on factors like payment history, amount owed, and overdue duration. Tailor your messages and follow-up timelines for each group.

2. Collect relevant details:

Have all necessary information ready, including the customer’s name, invoice specifics, payment history, and previous communications.

3. Set the timing and frequency: 

Choose optimal times to send emails, like mornings or weekdays. Plan follow-ups strategically, such as 3, 7, and 14 days after the payment failure.

Writing the email

1. Start with a clear subject line: 

Grab attention with concise and direct subject lines.

 Examples:

• ‘Action Required: Resolve Payment for Invoice #12345’
• ‘Your Payment Didn’t Go Through – Let’s Fix It’
  

2. Personalize the greeting and context: 

Address the customer by name and briefly reference their relationship with your business. Example: ‘Hi [Customer Name], we noticed an issue with your payment for [Service/Product].’

3. State the problem clearly:

Explain the overdue payment and provide key details such as the invoice number, amount owed, and due date. Avoid accusatory language and stick to the facts.

4. Highlight urgency and consequences: 

Politely mention the implications of non-payment, such as service suspension or late fees. Use phrases like, ‘To avoid disruption, please update your payment details by [Date].’

5. Include a strong call-to-action (CTA): 

Make it easy for customers to act. Include a prominent button or link to the payment portal, using action-oriented language like:

• ‘Update Payment Details Now’
• ‘Resolve Payment Issue Here’
  

6. Offer support and resources:

Show empathy by offering additional support. Provide links to FAQs, payment guides, or live chat options. Example: “Need help? Contact us at [Support Email/Phone].”

7. Close positively:

Reiterate your appreciation and desire to maintain the relationship.
Example: “Thank you for your prompt attention. We value your business and look forward to resolving this quickly.”

Post-writing: refine and monitor

1. Track and analyze results: 

Monitor email performance metrics like open rates, click-through rates, and payment resolutions. Use this data to refine your messaging and strategy.

2. Define an escalation protocol: 

For accounts that remain delinquent after the final email, establish escalation steps, such as follow-up phone calls, letters, or legal action.

Dunning Email Example: Best Practices To Follow For An Effective Dunning Email

To better understand how an effective dunning email should look, here’s an example that includes best practices:

Body: Hi [Customer Name], We have noticed that your recent payment for [Service/Product Name] on [Date] did not go through. This could be due to an expired credit card or insufficient funds. To avoid service disruption, please update your payment details by clicking the link below: [Update Payment Details] If you have any questions or need assistance, feel free to contact us at [Support Email] or [Support Phone Number]. Thank you for your prompt attention. We value your business and look forward to resolving this quickly. CTA Button: Update Your Payment Information

This example showcases the importance of a clear subject line, personalized greeting, a concise explanation of the issue, a strong call-to-action, and additional support options for the customer. 

How HighRadius Can Help Automate Dunning Emails?

HighRadius offers cutting-edge Collections Management Software that simplifies and automates the dunning process, ensuring businesses can recover overdue payments efficiently and enhance customer relationships. 

1. Advanced dunning automation

HighRadius’ advanced dunning management automates the process of creating and sending payment reminders. Businesses can:

• Use pre-configured templates to send tailored reminders for different delinquency stages.
• Automate escalation with a sequence of reminders, from initial notifications to final notices.
• Embed personalized payment links for real-time balance updates and instant payments, reducing friction in the payment process.

2. AI-powered worklist prioritization

The software leverages AI to prioritize collections tasks, predict customer payment behavior, and identify accounts at risk of delinquency. This allows businesses to focus on high-risk accounts while automated reminders manage routine follow-ups.

3. Seamless integration and real-time insights

The software integrates with ERP and CRM systems to provide real-time insights into customer accounts. Businesses can monitor the status of dunning emails, track payment resolutions, and adjust strategies based on analytics to improve collections performance.

4. Enhanced collector productivity

By automating repetitive tasks, such as email scheduling and payment tracking, the software enables collections teams to focus on more strategic activities. This can result in a productivity boost of up to 30%.

5. Improved customer experience

HighRadius enhances the customer experience by enabling consistent, professional communication throughout the collections process. By providing smart payment links and automated responses, customers can resolve payment issues easily, improving satisfaction and reducing frustration. This ensures smoother interactions and strengthens long-term business relationships.

FAQs

1. What is a dunning message?

A dunning message is a communication, often in the form of dunning emails, sent to remind customers about overdue payments or billing issues. It informs the recipient of the amount due, payment failure reasons, and steps to resolve the issue, ensuring timely payment and uninterrupted services.

2. What is an example of a dunning notice?

A dunning notice, such as a dunning email, might read: “Your payment of $50 for [Service] failed due to an expired card. To continue enjoying uninterrupted access, please update your payment details by [Date].” This dunning email example combines clarity, urgency, and a direct call to action.