Dunning
Dunning is the structured process of reminding customers about overdue payments and escalating collection steps if payment is not received.
Billing
Explanation
A dunning process typically defines:
• dunning levels, from a friendly reminder to formal notices and final demands,
• intervals between levels,
• actions per level, such as letters, emails, fees, interest, service suspension, or handover to collections,
• exceptions, for example for disputed invoices or key accounts.
In SAP, dunning is available in accounts receivable and, for high volumes, in Contract Accounts Receivable and Payable (FI-CA), where it can be combined with collections and dispute management.
Why It Matters
Effective dunning improves cash flow and reduces credit losses. Information from the dunning process – such as overdue balances and escalation status – is also relevant for estimating expected credit losses under ASC 326 and IFRS 9. In subscription businesses, dunning may trigger service suspension, which can affect contract status and revenue recognition.
Related Terms
FI-CA · ASC 326 Credit Losses · IFRS 9 · Recurring Billing · Installment Plan
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