Collections and the dunning cadence
A dunning cadence dated from the due date, what to do with disputes and broken promises, and when an overdue account leaves your hands.
Most late payments aren't refusals. The invoice went to the wrong inbox, it's waiting for a PO, or nobody asked. Dunning is the schedule of reminders that catches these before they age. Pinecrest's $6,000 invoice, INV-1005, was due November 11, 2026. Here's the cadence Northwind runs on it, dated from the due date.
November 8 (3 days before due)
Friendly reminder with the invoice attached, before it's due
November 12 (day 1)
Due yesterday: a short note and the payment link
November 18 (day 7)
A week late: ask whether anything is blocking payment
November 25 (day 14)
Two weeks late: a call to the person who approved the purchase
December 11 (day 30)
A month late: statement of account, and a stop on new orders
December 26 (day 45)
Six weeks late: a final written notice naming the next step
The cadence is a practice, not a rule, and the useful parts of it are the ones a script can't do. A call on day 14 finds the dispute that an email on day 30 wouldn't. A statement of account shows the customer every open item at once, which is often how a missing invoice turns up.
Step 1: Work the list
Start from the aging, by due date, largest and oldest first.
Step 2: Pause the disputes
A disputed invoice comes off the cadence until the dispute is settled. Chasing an invoice the customer has formally contested damages the relationship.
Step 3: Log every promise
A promise to pay gets a date and an amount in the record. Pinecrest promised to pay by December 15 and didn't, so the next step escalates rather than repeats.
Step 4: Keep the history on the customer
One timeline per customer, not per invoice, so whoever picks it up next sees every conversation.
Step 5: Stop shipping, not talking
Hold new orders past a set number of days late. Collections continue while the account is on hold.
When it goes to a collection agency
The federal Fair Debt Collection Practices Act is written for consumer debts: obligations for personal, family or household purposes. A business collecting its own business-to-business invoices in its own name is generally outside it. State law can still apply, and a third-party agency has its own obligations, so read the agreement before you hand an account over.
Keep collecting yourself
- Good at
- Keeps the relationship
- No fee
- Watch for
- Slow
- Takes founder time
- Best for
- A customer you want to keep
Demand letter from counsel
- Good at
- Signals the next step is legal
- Often enough on its own
- Watch for
- Ends the relationship
- Fees and costs
- Best for
- A large balance, a customer that has gone quiet
Collection agency
- Good at
- Takes it off your desk
- Paid only on recovery under contingency terms
- Watch for
- The agency keeps a share of what it recovers
- Your name is on how they behave
- Best for
- Small balances not worth founder time
Where this lesson's rules come from
The sources behind this lesson's requirements, by kind. Background reading explains; it is never the authority for a rule. Anything marked as a convention is ours, not the rule-maker's.
- Federal statute
- 15 U.S.C. §1692a(5) (Fair Debt Collection Practices Act) (opens in a new tab)The FDCPA's “debt” is a consumer's debtFree to read
- Background reading — not an authority
- Wikipedia, “Dunning (process)” (opens in a new tab)Dunning (process)Free to read
The words this lesson teaches
Each links to its glossary definition, which also names the authority behind it and the components that render it.
- DunningThe sequence of collection communicationsConvention
- Promise to payA customer commitment to a date and amountConvention
- Statement of accountOne customer's open invoices, payments and credits, with the balance due, sent to prompt payment and to surface disputes before they ageConvention
- AgingGrouping open receivables or payables into buckets by days past due date — current, 1–30, 31–60, 61–90, 90+
See also
- Order to cash (AR)The receivables stack from quote to revenue: quote → order → fulfillment → invoice → collection → cash application → revenue.
- AR aging and collections: a practical guide for startupsHow to read an AR aging, work out DSO, run a dunning cadence, record a promise to pay, escalate a late account and clear unapplied cash.
- CollectionsWorklistPromise-to-pay as a first-class object.
- DunningTimelinePer customer, not per invoice.
- CustomerStatementPrintable. Print styles are first-class.