Dunning Emails: An In-depth Guide With Examples and Subject Lines

Introduction to Dunning email

‘Failed Payment’ ‘High DSO’ ‘Past Due’ ‘Customer Churn’— These are situations that no SaaS or subscription-based businesses would ever want to be in. Life would be a lot easier if all payment obligations could be resolved quickly and easily.

In reality, the job of a collector is fraught with difficulties. It takes a lot of time and effort to categorize customers, contact them, and finally get paid. Past dues are common in mid-sized businesses and one of the most effective tools to deal with them is Dunning email.

This is a complete guide (with pre-built email templates) for collectors to help write effective Dunning emails. But, before we dive into the details, let’s understand the definition of a Dunning email and how pre-Dunning works.

What is pre-dunning?

Pre-dunning is the process of sending proactive reminders to customers 30, 15, or three days before the due date.These reminders contain a detailed summary of the invoice and payment details along with the outstanding balance.

Customers often tend to procrastinate going through invoices until the due date. Sending pre-dunning emails could be an opportunity to thank your customers for their business while also subtly reminding them that you expect to receive the payments on time.

Benefits of implementing pre-dunning into your collections strategy

Here are some benefits of implementing pre-dunning into your collections strategy:

1. Due date reminders: You can use a pre-dunning email to provide more clarity on the payment due date, the payment conditions, and the implications of late or non-payment.
2. Error-free collections: Pre-dunning helps prevent invoice-related discrepancies, short payments, and payment disputes.
3. Increased recovery rate: Pre-dunning allows the customer to review the invoices ahead of the due date and raise any issues or concerns they might have.

Even in case of unforeseen or unfortunate circumstances at the client’s end, you could begin negotiating on the right foot by reminding the customers that they are indebted to you.

Now that you understand pre-dunning, let’s take a closer look at Dunning emails.

What is a Dunning email?

Dunning email is a transactional email sent to customers with their account and invoice information to remind them about their due payments. The email usually includes information about the consequences of non-payment and may offer options for resolving the issue 

At some point in our lives, we’ve all encountered a situation when asking for our own money back seems unpleasant. Little do we realize that the other person may have forgotten about it or faced an unforeseen problem in paying back. Similarly, in the B2B world, most of the failed payments are unintentional.

Sending a Dunning email with the appropriate messaging is critical for reminding customers of their payment obligations. Moreover, maintaining a positive customer experience is vital to your business’ success. Hence, it is the collector’s responsibility to guide customers through the correct steps to complete their payment process.

Personalizing the Dunning email copy and having the right tone is key to the successful collection of failed payments.

What should you include in your collection’s dunning email?

Here are some essential pointers to remember when drafting your dunning email:

Why are you sending this?

Clearly state the purpose of the e-mail and mention the past-due amount. Ensure that your customers understand that their payment is due immediately by looking at the email.

How to pay?

Your dunning email must include suitable payment methods that provide your customers with the ‘pay anytime, anywhere’ experience. Include a call to action with the payment link. Moreover, you must ensure the payment process is simple and quick for a positive customer experience.

By when should they act?

You need to set up timelines for your customers depending on their risk categories. Create a sense of urgency about the matter; otherwise, there is a chance your customers might forget about it.

Whom to contact in case of disputes?

Your dunning email should have a customer care link in it. People are highly skeptical of online payments. As a result, you must provide customer service contact details so that customers can reach out to you in case of any concerns.

How to write an effective dunning email?

According to Prosperity Media, an average professional receives roughly 121 business emails every day. Your email must be well-structured to make an impression in such noisy inboxes. Every part of your email needs to be valuable and appealing.

The three essential components of an effective dunning email are:

Subject line:

The subject line of the email is the first thing your recipient will notice and it should be compelling enough to entice them to open it. Amplify the importance of the matter through it.

Here are a few examples that you could use as your next dunning email subject line:

• Action Required: Payment due for [Product Name]
• [Company Name] – Past due notice
• Hello [Name], you have an overdue payment

Body text:

The body text of your email should be brief and informative. It must include all the essential information. A B2B dunning email should be formal and polite, unlike B2C dunning emails which use a casual approach. The customer must understand the gravity of the situation, so instilling a sense of urgency and tying them to a deadline is important.

Here is an example for your reference:

The body of this dunning email takes a direct yet pleasant and formal approach. The first section emphasizes the past-due issue and provides information about the invoice and outstanding amount. The last section includes the payment option.

Conclusion line:

Customers may have queries related to the payment, so it is always a good idea to include your contact channels at the end.

For example, let’s check out this section in an email from Netflix:

Netflix uses an amicable tone as well as provides its contact information and help center details. It adds a human touch and gives your customers a sense of assurance to reach out if things go wrong. At times, a direct link to the FAQ section would also be useful.

Let’s look at some of the closing lines that you can use for your next dunning email:

• If you have any other questions relating to the invoice, please contact [Number] to discuss.
• If you have any unresolved problems concerning your account, please do not hesitate to contact us at [Contact Number].
• Let us know if there is anything we can do to help you. Reach out at [Contact].
• You can drop us an email at [Email Address] or contact [Number] for any support and guidance.

Dunning email template examples

Now that you understand how to write a Dunning email, let’s take a look at some ready-to-use Dunning email templates to get a better idea.

Template 1

This is a pre-dunning email template that you could send to your customers before the payment due date.

Template 2

This email serves as the first past-due reminder that you can send to your customer.

Template 3

This is the second email that you could send to your customers after the first reminder on their past-dues.

Template 4

This email template is the third past-due reminder for your customers that binds them within a time frame to complete the payment.

Template 5

This email template is to notify the customers about the suspension of credit. You can send this final email when the customer is unresponsive, even after multiple follow-ups over a period.

Template 6

This email sample is for important accounts to appreciate the relationship and make the customer feel valued.

Template 7

This email sample is for slow-paying customers. This uses a more direct approach.

Template 8

This email sample is for fast-paying customers who have a few unpaid invoices.

Ways to improve your Dunning email recovery rate

Your first dunning letter may not always result in recovery, so you need to do additional legwork to increase the recovery rate. Here are a few pointers that can help you improve your recovery rate:

• Add personalization:

  Personalized emails have a 2.5 times higher click-through rate than regular emails.

  Adding the first name and a touch of personalization based on previous interactions or customer information can make a significant difference. Every dunning email should include personalizations that enhance customer experience and set it apart from the mass emails that clutter inboxes.

• Loss aversion:

  Losing out on further credit relaxations is one of the key outcomes that customers risk facing when they don’t pay on time.

  Your dunning emails must make your customers experience the anxiety of losing something valuable. Make an effort to persuade them of the value of your service by emphasizing the benefits they will lose if they do not pay.

• Keep a professional tone:

  Your dunning letters should be polite, respectful, and helpful. Avoid a tone of desperation. Keep the email professional at all times.

  The first dunning letters should be more polite and focus on solving the problem, but with time, if there is no response from the account, your tone needs to be sterner to create a fear of losing favorable terms.

• Send multiple emails:

  Imagine you wrote the most excellent dunning email and sent it to your customer. A day passed, and a week passed, but there was no response. You sit back and wonder what went wrong that your email was ignored.

  There is, however, a catch: you can never expect full recovery by sending a single dunning email. You need to send a series of emails at regular intervals if the account is not responding. Sending two to three emails with gaps of one week each gives the best results.

• Do A/B testing with email copy:

  A/B testing is one of the many ways that businesses use to analyze how different dunning email templates perform. For this, you need to come up with two different email copies and send them to two different sets of recipients.

  The one getting a greater click-through rate would give you an insight into the messaging that works better for your customers. You can then use similar messaging in your other dunning emails to increase the chances of success.

• Automate your dunning:

  You may use automation to improve your collections and make your dunning process more efficient. You won’t need to worry about sending dunning emails at regular intervals anymore. The automated dunning process helps to reduce involuntary churn and lets you focus on more complicated tasks.

Best practices for dunning emails

There are plenty of practical and proven ways to help you manage the effectiveness of your dunning emails. We have listed below five industry-based best practices to keep your customers engaged and win back revenue:

• Keep it short and simple:

  The body of your dunning email should be brief and to the point, with a clear underlying message.

• Enable replies:

  Avoid using ‘Do not Reply’ email addresses. You must make sure your customers can reach you by replying to the email if they face any issues. Often people are too busy to contact customer care and prefer to respond to emails. Enabling replies enhances the customer experience.

• Optimize the call to action:

  Use a clear and concise call to action. Explain the next steps very clearly and make the process simple for the customer.

• Use a different sender for dunning emails:

  People often ignore promotional emails, and if you use the same sender for your dunning emails as you do for promotional emails, they will likely not yield the desired result. So it is best to use a different set of sender addresses for dunning, it will ensure faster payments.

• Put your company logo in the email:

  Your company logo creates a sense of authenticity in your emails. The customers must feel comfortable and confident seeing the email to proceed with the next steps.

Wrapping up

This is all about dunning emails and how to write them effectively. Well, there are no hard and fast rules for writing dunning emails, but one thing to keep in mind is that you must always deliver a good customer experience. Use the tips and tricks discussed in this guide to minimize customer churn by sending effective dunning emails.

Even so, we can not deny the fact that the dunning process is clerical, particularly for B2B businesses. You need to invest time to compose the right dunning letter for your customer. However, companies have started adopting automated dunning with the growing digital transformation, which is a game-changer.

At HighRadius, we help mid-sized as well as large enterprises automate the dunning process and streamline collections. To achieve touchless dunning and get paid faster with our collections software, schedule a demo with our experts and see the solution live in action.