What is dunning letter to customers? A question helpful to you all and me as well.

A dunning letter is a notification sent to a customer, stating that the customer is overdue in paying an account receivable to the sender. Dunning letters typically follow a progression from polite reminders to more strident demands for payment, if the customer continues to be non-responsive in paying. The first few letters that are sent to a customer should be polite, on the theory that the customer has simply overlooked payment, and the company wants to retain its goodwill for future business.

However, as more time passes, the company begins to change its assumption of doing further business with the customer, and so tends to downplay the amount of customer goodwill that it wants to retain in favor of being paid now. Irrespective of the tone of the letter, it always states the amount due, the date of the unpaid invoice, the number of the invoice, and any late payment fines or interest penalties.

At some point following the normal payment date, the effectiveness of issuing dunning letters will decline, so that a company discontinues their use and relies upon personal contacts, attorneys, and collection agencies instead.

A dunning letter can take a variety of physical forms. It was originally a letter that might be sent by regular mail, registered mail, or overnight delivery in order to convey the increasing urgency of the request, as well as to create a record of receipt (in the case of registered mail or overnight delivery). However, a dunning letter can also be sent as a fax, e-mail, or even a text message. These electronic delivery methods can go astray (especially a fax), and may not be as effective as the more traditional paper-based method.