Lesson 4 of 6
Dunning
6 min
Dunning is the structured reminder process for overdue receivables. The dunning program selects overdue items, assigns each a dunning level based on how far overdue it is, groups items per customer, and prints or sends a dunning notice whose tone gets firmer with each level. Done well, it collects cash without damaging customer relationships. Done badly, it sends angry letters to customers who already paid.
The dunning procedure
The rules live in a dunning procedure, assigned to each customer in its company code data. SAP's learning content lists the key settings: up to nine dunning levels; the dunning interval in days, which sets how often an account can be dunned; grace days added to the due date before an item counts as overdue for dunning; a minimum amount below which nothing is dunned; and optional dunning charges and interest. A customer without a dunning procedure is not dunned at all.
| Setting | Meaning | Contoso value (illustrative) |
|---|---|---|
| Dunning levels | Steps of increasing severity; up to nine | Three: friendly reminder, firm reminder, final notice |
| Days in arrears per level | How overdue an item must be to reach the level | Level 1 at 1 day, level 2 at 15 days, level 3 at 30 days |
| Dunning interval | Minimum days between two notices to the same account | 14 days |
| Grace days | Days added to the due date before dunning considers an item overdue | 3 days |
| Minimum amount | Accounts or items below this are not dunned | 50 USD |
| Charges and interest | Optional fees or interest per level | None; agreed with sales |
Running dunning
In SAP S/4HANA the app Create Dunning Notices runs the process; classic F150 does the same in Private Edition. SAP's learning content describes three steps: create the dunning run by entering parameters and scheduling the proposal; edit the proposal, including setting or removing dunning blocks and changing levels; then create the dunning notices, which also updates the dunning data in the customer master and on the dunned items.
- ParametersRun date and identification; dunning date; documents posted up to; company code 1710; customer range
- ProposalOverdue items selected, levels determined, items grouped into notices per customer
- Review and editBlock a customer or item, change a level for this run, delete and recreate if parameters were wrong
- Print or sendNotices created; dunning date and level written to customer and items
- Follow upCollections calls for final notices; Display Dunning History for questions
The dunning date in the parameters is the date used to calculate days in arrears; it is usually the run date. When several items of one customer are on one notice, the notice uses the text of the highest level among them. Level changes made in the proposal apply only to that run. And as with payments, the proposal is the control point: once notices are sent, a mistake means an apology letter. If a whole run was wrong, SAP provides a way to reverse a dunning run, but the letters are already out.
Dunning blocks
A dunning block stops dunning for a whole customer (set in the customer master) or a single item (set on the line item, for example in Manage Customer Line Items with a block reason). Use item blocks for disputed invoices and customer blocks for accounts under special arrangements, such as a payment plan agreed by Dan. Blocks need reasons and review dates; an unreviewed block is silent bad debt.
- Day 0Due dateInvoice to Great Lakes Fleet Services falls due
- Day 1–3Grace daysNot yet considered overdue for dunning
- First run after day 3Level 1Friendly reminder listing the item
- Day 15+, interval passedLevel 2Firm reminder
- Day 30+, interval passedLevel 3Final notice; collections call
What would you do?
The dunning proposal for Monday includes Great Lakes Fleet Services at level 3 for an invoice that Maria knows is disputed and under review by sales. What should she do?
- The dunning procedure sets levels (up to nine), interval, grace days, minimum amounts and charges.
- Create Dunning Notices (classic F150): parameters, proposal, edit, print; the proposal is the control point.
- The dunning date drives days in arrears; notices use the highest level's text.
- Dunning blocks on customers or items stop notices; give them reasons and review dates.
Check your understanding · not graded
Lesson check
1. What determines the dunning level of an overdue item?
2. What happens to a customer with no dunning procedure assigned?
3. What do grace days do?
4. When is the dunning level written to the customer master and items?