Why Accounts Receivable Dunning Is So Important

Invoice-based purchasing remains highly popular among both private and business customers. However, if a customer falls into payment default, your company is often left with the dunning process to recover outstanding receivables. A dunning notice is legally permissible even without a prior payment reminder, as both are essentially the same measure. With KLEVERBILL you can automate this process efficiently and professionally.

Dunning Notice or Payment Reminder: Is There a Difference?

From a legal perspective, there is no difference between a dunning notice and a payment reminder. Both are a creditor’s request to the debtor to settle the outstanding invoice once the payment deadline has passed.

That said, the terms differ in tone: a payment reminder sounds more polite and discreet, while a dunning notice is more direct and assertive. That is why many companies start with a friendly reminder and become more explicit over time.

Typical Dunning Process Workflow

If a customer enters default, the company should act promptly. A typical dunning process is structured in three stages:

1. Payment Reminder / Dunning Notice

Worded politely and with restraint to preserve the customer relationship. Legal consequences are usually not mentioned at this stage.

2. Payment Reminder / Dunning Notice

After another 10–14 days, the second notice becomes more demanding in tone. At this point, dunning fees or default interest may already be announced.

3. Payment Reminder / Dunning Notice

The final notice sets a clear deadline and indicates legal action if payment is not made.

Important: Legally, no multi-stage procedure is required. Once due date and default occur, a dunning notice may already be sent, or formal court-based dunning proceedings may even be initiated directly.

Dunning Without a Prior Payment Reminder – Is That Permissible?

Yes. A payment reminder is not legally required in order to send a dunning notice. A dunning notice without prior reminder is permissible as soon as the invoice is due. The prerequisite, however, is that the customer has previously received the invoice.

How to Calculate Dunning Fees Correctly

Dunning fees may be charged once the debtor is in default. However, these may only cover actual material costs incurred, such as paper, postage, and envelope. As a rule, EUR 2–3 per notice is permissible.

5 Tips for an Efficient Dunning Letter

✅ Ensure that all relevant details (invoice, customer, amount, payment deadline) are accurate.

✅ Set a new, clear payment deadline.

✅ Start in a friendly tone and become more explicit over time.

✅ Do not hesitate to announce dunning fees, interest, or legal action.

✅ Automate the entire process with KLEVERBILL to save time and reduce costs.

Automate Dunning with KLEVERBILL

With KLEVERBILL, you implement a modern dunning system that saves time, prevents errors, and protects your liquidity. Through automation, you retain full visibility, manage collections efficiently, and still remain customer-focused.