Dunning is a 17th-century term describing the process of business owners communicating with customers in an effort to collect money owed for goods or services provided. This collection process involves escalating degrees of intensity, typically involving the following iterative steps:
- Phone calls made to customers, gently reminding them of payments due
- Formal letters requesting payment
- In-person visits demanding payment
- Hiring third-party collections agencies to lean on delinquent customers
- Threatening legal action
- Executing litigation
The type of dunning businesses employ largely depends on factors such as the amount of debt owed, relationships with customers, and length of time payments are overdue. While dunning is traditionally handled by a company's accounts receivable department, overdue payments may eventually be turned over to internal collections departments, before they're fielded to external collections agencies. Most jurisdictions restrict intimidation and coercion tactics.