Kolleno Payments
Collecting overdue payments is never easy. Push too hard, and you damage valuable customer relationships. Push too softly, and your cash flow suffers. That’s where advanced dunning strategies can help. Done right, they improve payment recovery rates and preserve customer loyalty. Done wrong, they cost you time, money, and trust.
In this article, we’ll explain how you can use psychological principles to boost your recovery rates and reduce your days sales outstanding (DSO).
What is Dunning?
Dunning is the process of following up with customers after a missed payment. It ranges from polite payment reminders to phone calls and, if necessary, debt collection. At its core, it’s about payment recovery—while still protecting cash flow and customer relationships.
Payment failures happen for many reasons: insufficient funds, outdated payment information, or simple oversight. The way you manage overdue payments makes all the difference. A thoughtful dunning process can encourage prompt payment and preserve customer loyalty. A careless one risks lost revenue and trust.
Today, effective dunning management uses customer data, payment history, and personalized communication. Automated reminders, in-app notifications, and multi-channel strategies help firms recover payments quickly—while maintaining positive customer relationships.
Dunning Best Practices in 2025 and Beyond
The most effective dunning strategies blend psychology, technology, and empathy. It’s no longer just about chasing overdue payments—it’s about encouraging timely payments while maintaining positive customer relationships.
Here’s what leading firms are doing today.
Use Personalized Communication
Generic dunning messages don’t work. Tailor your payment reminders using customer data, payment history, and customer behavior. Personalized communication shows empathy and increases the chance of prompt payment while preserving customer satisfaction.
Rely on Multiple Communication Channels
Not all customers respond to the same approach. Combine in-app notifications, phone calls, emails, and even dunning letters are common to reach different customer segments. Multi-channel outreach keeps communication consistent and makes payment recovery more effective.
Offer Multiple Payment Options
Payment issues often arise because the process is inconvenient. By giving customers alternative payment methods and flexible payment options, you remove friction and encourage timely payments. The easier it is to pay, the faster overdue invoices get cleared.
Automate, but Stay Human
Automated reminders and smart dunning management tools streamline the accounts receivable process. But don’t lose the human touch. Use automation for efficiency while keeping space for human intervention when customer interactions need empathy or nuance.
Key Dunning Mistakes to Avoid
Even the smartest teams slip up when managing overdue invoices. These mistakes slow down payment recovery, strain customer relationships, and weaken cash flow. Avoiding them is just as important as following best practices.
Using a One-Size-Fits-All Approach
Not all customers miss payments for the same reason. Treating everyone the same ignores differences in customer behavior and payment history. Without customer segmentation, your dunning messages risk sounding generic—and far less effective.
Delaying Follow-Up
Waiting weeks to chase an overdue invoice can cost you. The longer you leave it, the harder it becomes to recover payments. Consistent, timely payment reminders help reduce non-payment and protect your cash flow.
Over-Reliance on One Channel
Relying only on emails—or only on phone calls—limits your chances of success. Customers respond differently depending on the situation. Without multi-channel communication strategies, overdue invoices slip through the cracks.
Over-Reliance on One Channel
Overly aggressive dunning messages damage valuable customer relationships. Push too hard, and you risk lost revenue and loyalty. Push too softly, and late payments drag on. The key is balancing firmness with empathy to preserve trust.
Where Kolleno Can Help
Avoiding mistakes is one thing. Building a successful dunning process is another. That’s where Kolleno comes in.
Kolleno’s platform brings together automated reminders, in-app notifications, and phone call scheduling into a single dunning management system. By using customer data and payment history, it personalizes communication strategies across multiple channels. This helps finance teams recover payments faster while maintaining positive customer relationships.
The platform also makes it simple to offer flexible payment options and track outstanding payments in real time. With automated processes taking care of routine follow-ups, your team can focus on customer interactions that require a human touch. The results? Improved payment recovery rates, healthier cash flow, and preserved customer loyalty.
In short, Kolleno helps firms replace outdated collections processes with effective dunning management—balancing efficiency, empathy, and customer engagement.
Final Thoughts
Dunning doesn’t have to damage customer relationships. Done right, it drives timely payments, strengthens trust, and keeps cash flow stable. The difference lies in how you manage the process—balancing psychology, communication, and technology.
With smart tools like Kolleno, you can move beyond chasing overdue invoices and build a dunning process that actually improves customer satisfaction. Faster recovery rates. Stronger relationships. Healthier cash flow. Ready to see it in action? Book a demo with Kolleno today.
