What is a dunning letter?

A dunning letter is a formal communication sent by a creditor to a debtor to remind them of an overdue payment. The purpose of a dunning letter is to request payment of the outstanding amount and to inform the debtor of potential consequences if the payment is not made.

Dunning letters typically include information such as the amount owed, the original due date, any late fees or interest charges that have accrued, and instructions on how to make a payment. The tone of a dunning letter can range from friendly reminders to more stern warnings, depending on the level of delinquency and the relationship between the creditor and debtor.

It is important for creditors to send dunning letters in a timely manner to encourage prompt payment from debtors. Failure to address overdue payments can result in further actions such as collections, legal action, or reporting to credit bureaus.