Collecting Overdue Invoices with a Dunning Ladder

Open Settings, Dunning Ladder. A ladder is up to eight stages, each firing at a number of days overdue, with a name, the channels it uses, a subject and a message. The channels are email, SMS, WhatsApp, and internal, which is an escalation to your own admins — a bell notice plus an email — rather than a message to the customer. The default ladder is a Friendly reminder on day 1 (email and SMS), a Firm reminder on day 7 (email, SMS and WhatsApp), a Final notice on day 14 (email, SMS and WhatsApp) and Escalate to your team on day 30.

Messages are written once and filled in per invoice with placeholders: {customer}, {invoice}, {amount}, {due_date}, {days_overdue}, {pay_link} and {business}. The pay link opens the signed pay-now page when you collect through IntaSend, and otherwise the customer portal, where the customer signs in by emailed link and pays by M-Pesa or card. Keep the early stages short and friendly — most late payers simply forgot — and save firmness for the stages that need it. An SMS is read on a small screen, so lead with the amount and the link.

In practice: a medical supplies distributor in Mombasa keeps the default days but rewrites the day-1 SMS to “Hi {customer}, invoice {invoice} for {amount} was due {due_date}. Pay here: {pay_link}. Thanks, {business}.” It drops SMS from the final notice because its hospital clients’ finance offices act on email, and adds a stage at day 45 on the internal channel only, so the sales director hears about every invoice still unpaid after six weeks.

The ladder is off until someone with the manage dunning permission switches it on. That is deliberate: SMS and WhatsApp go through your organization’s own SMS provider and your own approved WhatsApp template, so every message costs you money, and nobody should start paying for messages because a default appeared. Until it is on, the ordinary daily invoice reminder email runs as it always has. Once it is on, the ladder decides what customers hear about overdue invoices.

Each channel keeps its own rules. Email is the same customer reminder email as before, so it still obeys its on and off switch in notification settings and your plan’s daily email allowance. SMS needs a phone number on the customer and a working SMS provider; WhatsApp needs your approved template. A channel that cannot be used for an invoice — no phone number, provider not set up — is recorded as skipped or failed on that invoice rather than silently forgotten, so the history explains why a customer heard nothing.

In practice: a printing company switches the ladder on with SMS on every stage. At the end of the month its SMS bill has tripled. Reading the invoice histories, the owner sees most SMS went to customers who paid within a day of the first reminder. She moves SMS to start at day 7 and keeps day 1 as email only, which halves the bill without slowing collections.

The ladder runs once a day over invoices with a balance that are past their due date. Each stage reaches each of its channels once per invoice, ever — a row is recorded for every attempt, whether it was sent, failed or skipped, so nothing is re-sent the next day. An invoice never hears from two stages on the same day. And the latest stage due wins: an invoice that is already 20 days overdue when you switch the ladder on gets the day-14 final notice, not a friendly day-1 note, and the stages it jumped are recorded as skipped so they never fire after the later one.

It stops by itself in three cases. When the invoice is paid, because only invoices with a balance are read. When the customer’s dunning is paused. And while a recurring schedule is still trying to auto-charge the invoice: the charge is retried first, and the invoice is handed to the ladder only once auto-charge gives up. Stages are keyed by their day, so editing a stage’s wording keeps its history, but moving it to another day makes it a new stage — an invoice that already heard from day 7 can hear from a stage moved to day 8.

In practice: a security firm switches the ladder on for the first time with 60 invoices already overdue. A client 3 days late gets the day-1 reminder that day; one 9 days late gets the day-7 reminder, with day 1 recorded as skipped; one 40 days late gets only the day-30 escalation to the operations manager. The next morning nobody hears a second stage, and a client who pays overnight hears nothing more at all.

Some customers should not be chased automatically: a dispute is open, a payment plan has been agreed, or the account is handled personally by a director. Open the customer and use the Collections panel to pause dunning for that customer; resume it from the same place. Pausing needs the manage dunning permission. While paused, none of that customer’s invoices get any stage, and when it is resumed the ladder picks up at the stage each invoice is due for now, not the ones it missed.

Every invoice shows its dunning history: which stage went out on which channel and on what date, and whether it was sent, failed or skipped, with the reason. That is the answer when a customer says “nobody told us” — you can see the SMS that failed because the number was wrong, or the email that was skipped because the customer has no address. The ladder, the invoice history and the customer pause are also in the mobile app, so a collections officer can pause a customer from the field after agreeing a plan.

In practice: a hardware wholesaler’s biggest client disputes a delivery and refuses to pay KES 640,000 until it is resolved. The credit controller pauses dunning on the client so it does not receive a “final notice” in the middle of the negotiation. Three weeks later a credit note settles part of the dispute and she resumes dunning; the remaining invoice, now 35 days overdue, gets the day-30 escalation to her team rather than a day-1 reminder, because that is the stage due now.