DEFINITION of Dunning
Dunning refers to making insistent demands for the payment of a debt. Dunning, in the business context, refers to the collections process. During the collections process, a business will have its own personnel or a hired third party contact customers who have fallen behind on paying their bills. Dunning is a slang term believed to have originated in the 17th century.
BREAKING DOWN Dunning
The degree of dunning that a business may resort to depends on several factors, including the amount of the debt, the relationship with the errant borrower, and the length of time for which the payment is overdue. While payments from clients for goods supplied or services rendered are generally processed by the accounts receivable department, overdue payments may be turned over to the collections department.
The process of dunning involves the collections department issuing several reminders over a period of time to the party from which payment is overdue. Unless payment is received, the tone of communications in such cases may get progressively more aggressive, with the company ultimately threatening to take legal action and turning the matter over to a collections agency.
Most jurisdictions restrict the tactics that can be used by companies and collection agencies to collect overdue payments, with intimidation and coercion being among the prohibited devices.