Dunning messages are communications that businesses send to customers to remind them about overdue payments or notify them of failed transactions. These messages are an important part of accounts receivable management and a common tool for businesses with recurring billing models, such as subscription services. Dunning messages benefit businesses by helping prevent customer churn—especially involuntary churn.

When executed thoughtfully and strategically, dunning messages can deliver a positive customer experience, ease dunning management, and create lasting brand affinity. Below, we’ll look at how to do this.

What’s in this article?

• When do you need to send a dunning message?
  
• Why dunning messages are important
  
• How to write dunning messages: A step-by-step guide
  
• Best practices for dunning message writing
  
• How Stripe can help
  

When do you need to send a dunning message?

There are many situations in which a business might need to send dunning messages to customers, including:

• When a payment is overdue: This is the most common reason to send a dunning message. If a customer has not paid their bill by the due date, a reminder can prompt them to make the payment.

• For recurring subscription services: In subscription models, businesses can send dunning messages to customers whose recurring payment methods have failed. These messages can remind them to update their payment information to keep their accounts active.

• Before service suspension: In cases where nonpayment might lead to suspension of services, sending a dunning message beforehand can alert the customer to the impending action and give them a chance to rectify the situation.

• After a declined transaction: Payment transactions can be declined because of a variety of reasons, such as insufficient funds or card expiration. Sending a dunning message after a payment is declined informs the customer of the issue and gives them the opportunity to request an alternate payment method.

• For incomplete payment setups: Customers might start a payment process but not complete it. A dunning message can remind them to finish setting up their payment method.

• Periodic account updates: Dunning messages can remind customers to update their account details, which is especially useful if the payment method on file is close to expiring.

• To enforce updated terms: Dunning messages can be used to inform customers of changes to payment terms or policies, especially if they affect how or when payments are made.

Though the content of a dunning message will vary based on the situation, every dunning message should include certain key components:

• Identify the sender clearly: Make sure the message includes the name of the sender, either the name of your business or the billing department. This helps establish trust with customers.

• Customer information: Include the customer’s name and any relevant account information. This personalizes the message and lets the customer know it’s meant for them.

• Specific details of the issue: State the reason for the dunning message, whether it’s an overdue payment, a declined card, or a need for updated payment information. Provide specific details such as invoice numbers, dates, and amounts due.

• Clear call to action: Tell the customer exactly what they must do next, whether it’s making a payment, updating payment details, or contacting customer service for more information.

• Payment instructions: Provide detailed instructions on how to make the payment, including payment methods accepted and any online portals or links they can use.

• Due date for resolution: Specify a deadline by which the customer must take action. This creates a sense of urgency and helps resolve the issue more quickly.

• Consequences of nonaction: Inform the customer what will happen if they do not take the necessary action. This might include late fees, service suspension, or further collection efforts.

• Contact information: Give the customer a way to get in touch with you if they have questions or need assistance, such as a customer service phone number or email address.

• A polite and respectful tone: Maintain a courteous and empathetic tone. This helps preserve a positive customer relationship, even in the face of payment issues.

• Privacy and security reminders: Remind customers not to send sensitive information such as credit card numbers via email, and direct them to safe methods of communication or payment.

Why dunning messages are important

When looking at ways to develop an exceptional customer experience and nurture brand loyalty, businesses can easily overlook transactional communications such as dunning messages. But those types of small components add up over time and shape a customer’s impression of a business. Here are reasons why dunning messages matter:

• Maintaining cash flow: Timely payments are key for the financial health of any business. Dunning messages help ensure receivables are collected promptly.

• Minimizing bad debt: By actively pursuing overdue payments through dunning messages, businesses can reduce the amount of bad debt they incur. This is important for maintaining a healthy balance sheet.

• Improving customer communication: Dunning messages provide an opportunity for regular communication with customers. When done correctly, these communications can strengthen the relationship, even in the context of debt collection.

• Promoting customer responsibility: Regular dunning messages remind customers of their payment obligations and encourage a culture of timely payments, which benefits the business and the customer.

• Identifying and resolving issues: Sometimes, nonpayment stems from misunderstandings or errors. Dunning messages open communication to identify and quickly resolve these issues, improving overall customer satisfaction.

• Reinforcing payment terms: These messages reiterate the agreed-upon payment terms and conditions and confirm customers are aware of and adhere to these terms.

• Demonstrating professionalism: Well-crafted dunning messages reflect the professionalism of your business. They show you are serious about your financial processes and customer relationships.

• Encouraging customer retention: By showing customers you are handling potentially negative situations such as late payments with tact and professionalism, dunning messages can play an important part in retaining customers.

• Providing legal protection: In case of a legal dispute over payments, a record of dunning messages can serve as evidence that your business took necessary steps to collect the debt.

• Enhancing customer experience: Though it may seem counterintuitive, effective dunning messages can improve the overall customer experience by providing customers with helpful information and options for resolving payment issues.

How to write dunning messages: A step-by-step guide

Typically, dunning messages are not long, but they still require planning. Here’s a guide for writing impactful dunning messages:

Step 1: Prepare the basics

• Identify the customer: Make sure you have the correct customer details, including name and contact information.

• Review account details: Confirm the specifics of the overdue amount, including invoice number, total amount due, and due date.

Step 2: Choose the tone

• Professional and polite: Make sure your message is courteous in tone.

• Gradually escalate: If further reminders are necessary, gradually become firmer in tone, but always remain respectful.

Step 3: Structure the message

• Subject line: The subject line should be direct and make it easy for customers to find the message quickly—for example, “Reminder: Invoice #12345 Overdue.”

• Greeting: Use a polite and personal greeting such as “Dear [Customer Name].”

• First paragraph—state the purpose: Briefly mention the purpose of the email. For example, “I’m writing to remind you of the outstanding payment for Invoice #12345.”

• Second paragraph—provide details: Include specifics such as the invoice number, the total amount due, the due date, and late fees (if applicable).

• Third paragraph—offer assistance: Indicate your willingness to help if there are any issues or misunderstandings about the payment.

• Closing: End with a call to action, such as requesting payment by a specific date, and thank the customer for their time and attention.

• Signature: Include your contact information in your signature.

Step 4: Consider the method of delivery

• Email: Email is the most common method for sending dunning messages.

• Physical mail: Physical mail can be used as a follow-up if customers don’t respond to email.

• Phone call: In certain cases, a phone call can be more effective—and prompt quicker action—than email.

Step 5: Timing and frequency

• Initial reminder: Send the initial reminder shortly after the payment becomes overdue.

• Follow-up reminders: Depending on the response, send additional reminders at regular intervals, such as weekly or biweekly.

Step 6: Keep records

• Document communications: Keep a record of all correspondences for reference.
  

Step 7: Legal considerations

• Know the laws: Be aware of laws and regulations regarding debt collection in your region to certify compliance.
  

Step 8: Offer payment solutions

• Flexible options: If possible, provide payment plans or other solutions for customers who are struggling financially.
  

Step 9: Final notice

If necessary, send a final notice indicating potential consequences of nonpayment, such as legal action or reporting to credit agencies.

Step 10: Evaluate and adjust

• Feedback and improvement: Analyze the responses and effectiveness of your messages, and adjust your strategy as needed.
  

Best practices for dunning message writing

How and when you deliver a dunning message are just as important as its content. Here are some best practices for writing dunning messages:

Clarity and transparency

• State the issue clearly: Identify the overdue payment, including invoice number, amount due, and original due date.

• Give context: Briefly explain the origin of the invoice (e.g., recent purchase, subscription renewal) to jog the customer’s memory.

• Avoid ambiguity: Use concise, straightforward language to eliminate confusion.

Neutral tone and empathy

• Maintain professionalism: Use a neutral, respectful tone. Avoid accusatory or harsh language.

• Acknowledge realities: Recognize that nonpayment might not be intentional and might be the result of a change in the customer’s finances or a technical glitch.

• Show understanding: Use phrases such as “We understand that …” or “We’re here to help” to build trust and encourage cooperation.

Providing options and support

• Accept diverse payment methods: Cater to a variety of preferences with online portals, phone payments, and in-person options.

• Present flexible solutions: Consider accepting partial payments, extending deadlines, or finding alternative arrangements to meet the customer’s needs.

• Provide accessible instructions: Simplify the payment process with easy-to-follow steps for each method.

• Create support channels: Make it easy for the customer to reach out with questions or concerns.

Firmness without force

• Emphasize the importance of payment: Use respectful but direct language to remind the customer of their obligations.

• Focus on facts and consequences: Avoid emotional appeals or veiled threats. Inform customers about potential late fees or further consequences if payment isn’t received.

• Maintain a courteous tone: Treat the customer with respect, even in the face of an overdue payment.

Data-driven optimization

• Track customer responses: Monitor how customers react to different formats, tones, and options. Analyze the data to identify what works best.

• Refine your methods: Use data-driven insights to improve messages. Tailor content and tone based on successful interactions.

• Continuously improve: Review and revise your dunning strategy regularly based on new data and customer feedback.

Personalization tips

• Address the customer by name.

• Reference their payment history or purchase details.

• Use a friendly and polite tone that reflects your brand’s voice.

Additional best practices

• Start with a friendly reminder before escalating the tone.

• Use a subject line that accurately describes the message content.

• Keep the message concise and to the point.

• Provide multiple contact options for customer convenience.

• Consider using a professional dunning service for complex situations.

How Stripe can help

Stripe gives businesses access to flexible dunning management support that can augment your own thoughtful strategy. Here’s a brief overview of how Stripe can help with dunning management:

• Advanced payment recovery tools: Stripe’s dunning management includes sophisticated algorithms that analyze the best times to attempt payment retries, based on industry data and individual customer payment patterns. This method increases the success rate of recovering failed payments.

• Customizable email templates: Stripe provides a range of customizable email templates specifically designed for dunning communications. These templates can be tailored to match your brand’s tone and language and provide a consistent customer experience. They also include placeholders for content such as customer names, due amounts, and payment deadlines, making each communication personalized and relevant.

• Flexible payment options for customers: To reduce payment friction, Stripe provides multiple payment methods and currencies. This flexibility lets customers choose their preferred payment option, increasing the likelihood of successful transactions. Stripe can also integrate with a variety of billing systems, enabling easy updates of customer payment information.

• Real-time alerts and notifications: Stripe’s Dashboard has real-time alerts for payment failures and successful recoveries. This immediate feedback helps businesses address issues quickly and keep track of dunning efforts.

• In-depth analytics and reporting: Stripe provides detailed analytics on payment attempts, success rates, and customer responses to dunning communications. Businesses can use these insights to further refine dunning strategies, identify common issues that cause payment failures, and better understand customer behavior.

• Application programming interface (API) integration for custom solutions: Stripe provides comprehensive API support, which lets businesses integrate dunning management processes into custom systems or third-party applications. This flexibility is particularly beneficial for businesses that require a more tailored strategy for payment recovery and customer communication.