Dunning
Dunning: Dunning is the structured sequence of reminders a lender sends to recover an overdue payment. A dunning strategy defines what is sent, on which channel, at what interval and with what escalation in tone — converting ad-hoc chasing into a designed, measurable process.
Why Dunning matters in credit and collections
- Begins with gentle reminders (pre-date) and escalates to firm demands.
- Modern platforms automate omnichannel dunning to thousands of accounts simultaneously.
- A well-structured dunning workflow drastically prevents Day 1 defaults from migrating to Day 30.
What separates a dunning strategy from sending reminders
A real dunning design specifies four variables: timing, channel, message and escalation. Timing usually starts pre-due — a reminder two or three days before the due date prevents more delinquency per rupee spent than anything sent afterwards. Channel is then sequenced from cheapest to most expensive: SMS and WhatsApp, then AI voice, then human calling, then field. Message escalates from a neutral reminder to a consequence-bearing notice. Escalation defines the trigger for moving up a channel.
The failure mode is sending the same reminder repeatedly on the same channel. Borrowers habituate quickly, response rates collapse, and the lender concludes that reminders do not work when in fact the sequence was never varied. Effective dunning changes something at each step.
Every touch should carry a frictionless payment path. A reminder that tells someone they owe money without giving them a one-tap way to pay it is doing half the job, and the drop-off between intent and payment is where most dunning value is lost.
Regulatory basis
Collections communication is constrained by the RBI Fair Practices Code, which requires lenders to avoid harassment, restrict contact to reasonable hours and refrain from inappropriate escalation. Automated calling and commercial messaging are separately regulated by TRAI's telecom commercial communications framework, including consent and preference requirements.
Source: Reserve Bank of India / TRAIHow to design a dunning sequence
- Start before the due date. Pre-due reminders are the highest-return message in the entire cycle.
- Sequence channels from cheapest to most expensive and only escalate on non-response.
- Vary the message at every step. Repetition on one channel trains borrowers to ignore you.
- Embed a payment link in every touch and measure click-to-pay conversion, not just delivery.
- Segment by propensity to pay rather than by DPD alone, so expensive channels go where they change the outcome.
- Respect Fair Practices Code hours and frequency limits — and log consent, because you may have to evidence it.
Dunning — frequently asked questions
How many dunning reminders should be sent before escalating?
There is no universal number. What matters is that each step changes channel or message and that escalation is triggered by non-response rather than by elapsed time alone. Repeating an identical reminder produces habituation, not payment.
Is WhatsApp compliant for collections communication in India?
It can be, provided the lender uses a verified business channel, has a lawful basis for contacting the borrower, honours opt-outs, and keeps content and timing consistent with the RBI Fair Practices Code. The channel is not the compliance question — conduct, consent and record-keeping are.