A piggy bank surrounded by European coins.There’s no denying it: there’s a lot to love about the subscription business model. Why else would we be witnessing the rise of the so-called “subscription economy?”

But for all the advantages that subscription customers and automated billing offer any business, one pain point that can’t be avoided is the hassle of dealing with declined credit cards. As with almost any other problem, the best course of action is prevention – but since that’s not always possible you need to have an effective plan for collecting on past due accounts and retaining the clients attached to them. This is true whether your subscription service is selling business software or a monthly delivery of curated snacks.

This process, known as “dunning,” is difficult but not impossible. Let’s take a closer look at what exactly dunning is and how to do it right (spoiler: Subscription DNA helps).

What is Dunning Management and Why Is it Necessary?

If you’ve got a subscription service these days, you make your money by regularly billing each customer’s credit card. Sooner or later, though, any given customer’s credit card is going to be declined and you’re going to be left one payment poorer. This can happen for any number of reasons: credit cards expire; they get stolen; they get cancelled; they get maxed out; customers move; the list goes on.

Unfortunately the simple fact of the matter is that many customers’ first though in many of these cases isn’t going to be updating the payment info their billing services have on file. That’s where dunning comes in.

Dunning means communicating with clients and customers to let them know that their account is past due and ensure the swift collection of payment. This is most often done via email in modern subscription billing contexts, but dunning can take any form. Dunning management is the process of making sure this communication is done effectively. Without a good dunning management plan, you’re essentially resigning yourself to endless churn and an ultimate client retention rate of 0%. (Remember: all credit cards expire.)

Now that we’ve got a better understanding of what dunning is and why it’s necessary, let’s take a look at some best practices.

Dunning Tips for Subscription Service Companies

Be Proactive: Where it’s possible, never wait until an account is past due to reach out to a customer. In cases where a credit card is cancelled due to fraud or theft this won’t be possible, but it’s best practice to send out a few emails to clients whose credit card on file is set to expire soon. This process (known as “pre-dunning email”) can be automated or done manually (we recommend automatic), but the important thing is that you minimize the risk of accounts becoming past due in the first place.

Be Prompt: The second a customer’s account becomes past due, a flag should go up and the dunning process should begin. Dunning emails are best when they’re prompt, regular (they should be sent every 3-5 days until payment is received or a specific time cut-off is reached), and personal. Here’s a good sample email:

Subject: Uh oh, [Client Name]! You need to update your billing info for [Your Company]!

Body: Hi, [Client Name] – The credit card we have on file for you has been declined. We know you’ve been enjoying our services as much as we’ve enjoyed having you as a client, so it’s important that you update your payment information as soon as possible so that we can keep your account active.

Please follow this link to your account and enter your updated payment information: [URL]

If you have any questions or concerns please call us at 800-555-5555 and thanks for being a customer!


Your Name

The tone and content of your dunning emails will depend on your company’s personality and brand, as well as your customers’ taste.

A woman at work on a laptop computer.Use More than One Medium: Unfortunately for this in the process of dunning, emails that make prominent mention of credit card numbers are often flagged by spam filters. That’s why it’s a good idea to incorporate phone calls, SMS texts, or even direct mail into your dunning process.

Offer a Grace Period: A lot of times customers might not even realize that their card is being declined. Give them time to rectify the situation before you outright cancel their account. Most experts recommend somewhere in the ballpark of 21 days from the initial missed payment to the point of account termination. Ultimately though, this window is up to you based on your preferences and the nature of your service. In the meantime, give your past-due customers every opportunity to be reminded that they’re indebted to you using the tips above.

If you want a subscription billing platform that provides cutting edge billing, membership management, and communication tools for every stage of the billing process from sign-up to dunning (though hopefully not so much the latter), try Subscription DNA. Learn more by filling out the form below.