NetSuite Dunning Letters: Automate Collections (2026)

NetSuite dunning: getting paid without the awkward phone calls

Chasing past-due invoices is one of the least enjoyable parts of running a business. But ignoring overdue accounts doesn't make them go away — it makes them worse. Dunning is the process of systematically reminding customers that they owe you money, escalating the urgency as invoices age further past due.

TL;DR: NetSuite's dunning feature automates collection letters — you define dunning procedures with escalation levels (friendly reminder at 7 days, firm notice at 30 days, final warning at 60 days), customize email templates for each level, and NetSuite sends them automatically based on invoice aging. You can also print letters for mail delivery. Dunning runs on a schedule, tracks customer response, and integrates with AR for a complete view of collection status. Dunning is available as a SuiteApp that you install from SuiteBundler.

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How dunning works in NetSuite

Dunning procedures

A dunning procedure defines the escalation path — what happens at each stage of overdue aging.

Example procedure:

Level	Days Past Due	Action	Tone
1	7 days	Email reminder	Friendly: "Just a reminder that invoice #1234 is past due"
2	21 days	Email + phone follow-up	Firm: "Your account is now 21 days overdue. Please remit payment"
3	45 days	Formal letter	Serious: "This is a formal notice. Payment is required within 10 days"
4	60 days	Final notice	Final: "Failure to pay within 5 days may result in account suspension"

Each level specifies:

• The number of days past due that triggers it
• The minimum days between dunning letters (don't send three letters in one week)
• The email template or letter template to use
• Whether to include a copy of the invoice
• Who to CC (sales rep, account manager, legal)

Setting up dunning

Install the Dunning Letters SuiteApp: Navigate to Customization > SuiteBundler > Search and Install Bundles, and search for "Dunning Letters" (bundle ID 392827). Install the SuiteApp to activate dunning functionality.

Create dunning procedures:

1. Navigate to Dunning > Setup > Dunning Procedures
2. Define the procedure name (e.g., "Standard Collections")
3. Add levels with days past due, minimum interval, and templates
4. Set the maximum number of dunning letters per level

Assign procedures to customers: Each customer record has a dunning procedure field. You can:

• Set a default procedure for all customers
• Override with specific procedures for different customer segments
• Exempt specific customers from dunning (strategic accounts you handle manually)

Create email templates: Navigate to Documents > Templates > Email Templates > New to create templates for each dunning level. Dunning-specific template records are managed at Dunning > Setup > Dunning Templates. Include merge fields for:

• Customer name and contact
• Invoice numbers and amounts
• Total balance due
• Days past due
• Payment link or instructions

Running dunning

Dunning can run:

• Automatically: On a scheduled cadence (daily, weekly)
• Manually: From the Dunning Letters menu when you want to review before sending

When dunning runs:

1. NetSuite evaluates all open invoices past due
2. Matches each customer's overdue invoices to their assigned dunning procedure
3. Determines which level each customer has reached
4. Generates the appropriate letters/emails
5. Sends (or queues for review and manual send)
6. Records the dunning activity on the customer record

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Customizing dunning letters

What to include

Effective dunning letters include:

• Customer name and account number: Personalized, not generic
• Specific invoices: List each overdue invoice with number, date, original amount, and amount remaining
• Total past due: The aggregate amount owed
• Payment instructions: How to pay (check address, wire details, online payment link)
• Contact information: Who to call with questions (not a generic support email)
• Consequences (later levels): What happens if payment isn't received — late fees, service suspension, collections referral

Tone progression

The tone should escalate with the aging:

Level 1 (7 days): Assume it's an oversight. "We noticed that invoice #1234 for $2,500, due on March 1, is currently outstanding. This is a friendly reminder — please arrange payment at your earliest convenience."

Level 2 (21 days): More direct. "Your account has an outstanding balance of $2,500 that is now 21 days past due. Please remit payment within 5 business days."

Level 3 (45 days): Formal. "Despite previous reminders, your account remains past due. The outstanding balance of $2,500 must be resolved within 10 days to avoid additional action."

Level 4 (60+ days): Final warning. "This is a final notice regarding your overdue balance of $2,500. If payment is not received within 5 business days, we will be required to [suspend services / refer to collections / assess late fees]."

Multi-language support

For international customers, create dunning templates in their preferred language. NetSuite's multi-language capabilities allow different templates per customer language preference.

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Dunning with multiple invoices

Most real-world dunning involves customers with multiple open invoices at different aging stages. NetSuite handles this:

Consolidated letters: One letter per customer listing all overdue invoices, rather than a separate letter for each invoice. The dunning level is determined by the oldest past-due invoice.

Invoice-level tracking: Even within a consolidated letter, each invoice's aging is tracked individually. A customer might have one invoice at Level 3 and another at Level 1.

Partial payment handling: If a customer has partially paid an invoice, the dunning letter reflects the remaining balance, not the original amount.

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Exclusions and special handling

Dunning exclusions

Exclude from dunning:

• Customers in dispute: If an invoice is disputed, dunning makes the situation worse. Put disputed invoices on hold.
• Customers on payment plans: If you've arranged a payment schedule, dunning is counterproductive.
• VIP / strategic accounts: Large accounts where the relationship manager handles collections personally.
• Government customers: Government agencies often have fixed payment cycles (NET 60+) that don't respond to dunning.

Credit hold integration

NetSuite can automatically place customers on credit hold when they reach a certain dunning level:

• Level 3 → Credit hold: no new orders until balance is resolved
• Level 4 → Credit hold + service suspension

This creates real consequences that motivate payment beyond just sending letters.

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Measuring dunning effectiveness

Track these metrics:

Collection rate by dunning level: What percentage of amounts are collected at each level? If Level 1 collects 40% and Level 2 collects 25%, your early reminders are working. If nothing collects until Level 4, your early letters need work.

Days Sales Outstanding (DSO): Track DSO before and after implementing dunning. A well-tuned dunning process can meaningfully reduce DSO, though results vary by industry and customer base.

Dunning response time: How quickly do customers pay after receiving a dunning letter? This tells you which levels are most effective.

Escalation rate: What percentage of customers reach Level 3 or 4? A high escalation rate means either your Level 1–2 letters aren't effective, your payment terms don't match your customers' payment cycles, or you have a customer credit quality issue.

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Best practices

Start early and be consistent. A friendly reminder at 7 days past due is more effective (and less awkward) than a stern letter at 60 days. The earlier you start the conversation, the more likely you are to collect quickly.

Include specific payment instructions. Don't just say "please pay." Include the payment link, wire transfer details, check mailing address, and accounts payable contact email. Remove every friction point.

Personalize the sender. Letters from "accounts.receivable@company.com" get ignored. Letters from the customer's sales rep or account manager get attention. Configure the "from" address to match the relationship.

Don't dunning dispute invoices. Before sending a dunning letter, verify that the invoice isn't in dispute. Sending a collection letter for a disputed invoice damages the customer relationship and shows your team isn't communicating.

Review and update templates quarterly. Look at which level is most effective, adjust timing and tone, and test new approaches. Dunning is not "set it and forget it."

Combine dunning with aging reports. Dunning automates the outreach, but someone should review the AR aging report weekly to identify patterns — customers who are consistently late, industries with longer payment cycles, or invoices that indicate a deeper problem.

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Frequently Asked Questions

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