Dunning is the process of systematically communicating with customers to collect payments after a recurring subscription payment has failed. For SaaS businesses that rely on subscription revenue, dunning is a critical tool for preventing involuntary churn—when a customer unintentionally loses their subscription due to a technical issue like an expired credit card, not because they actively chose to cancel.

Effective dunning isn’t about aggressively chasing down late payments. Instead, it’s an automated, customer-friendly process that combines smart payment retries with helpful email notifications. The goal is to resolve the payment issue, retain the customer, and protect your revenue stream without creating a negative customer experience or a heavy operational load for your team.

This guide explains how to think about and implement a dunning strategy, from the underlying logic to the customer-facing communications.

A well-designed dunning system automates the most common causes of payment failure, saving your team from endless manual follow-ups. It primarily consists of two automated components that work together: payment retries and customer messaging.

These components are designed to handle the most common reasons for failed payments, including:

• Expired credit or debit cards
• Outdated card information (e.g., new CVC or address)
• Insufficient funds
• Bank-side network declines or processing errors

Here’s a breakdown of the core parts.

When a scheduled subscription payment fails, instead of immediately canceling the subscription, the system automatically tries to charge the card again. This is not done randomly. A “retry schedule” dictates the timing and frequency of these attempts. For example, a common schedule might be to retry the payment 3, 7, and 14 days after the initial failure.

Simultaneously, the system triggers a series of automated emails to the customer. These messages inform them about the payment failure and provide a simple, secure way to update their billing information. The tone is helpful, not demanding, and the goal is to guide the user to resolve the issue themselves.

Simply retrying a payment every day can do more harm than good, as it can look like fraudulent activity to payment processors and banks. A smarter approach uses a strategic schedule to maximize the chances of success.

• Use a variable schedule: Don’t retry every 24 hours. Spacing out retries (e.g., after 3 days, then 5 days, then 7 days) is more effective. Many payment failures are temporary (insufficient funds) and resolve within a few days.
• Implement “smart retries”: More advanced systems, often powered by payment processors like Stripe, use machine learning to analyze the reason for the failure. The system can then choose the optimal time to retry the card based on historical data from millions of transactions. For example, a soft decline (“Do Not Honor”) might be retried sooner than a hard decline (“Invalid Card”).
• Stop after a reasonable number of attempts: After 3-4 failed attempts over a couple of weeks, the likelihood of success drops significantly. Continuing to retry is unlikely to work and can lead to higher transaction fees from your payment provider. At this point, it’s best to pause or cancel the subscription until the customer updates their details.

Your dunning emails are a direct conversation with your customer during a sensitive moment. The goal is to be clear, helpful, and empathetic. A panicked or accusatory tone will only increase churn.

Here is a sample four-email sequence that covers the entire dunning period.

Sent before the card expires, this is a proactive, friendly reminder.

• Subject: Your payment method for [Product Name] is about to expire
• Content: A simple heads-up that the card on file is expiring soon. Provide a direct link to the billing page to update it. This helps avoid payment failure altogether.

Sent immediately after the first failed payment. The tone should be light and assume a technical glitch.

• Subject: There was an issue processing your payment
• Content: Let them know the payment didn’t go through and that you’ll try again in a few days. Frame it as a minor issue: “Sometimes this happens if a card has expired or a bank network is temporarily down.” Provide a link to update their payment details if they know there’s an issue.

Sent after the second or third failed attempt. The urgency increases slightly, but the tone remains helpful.

• Subject: Your [Product Name] subscription is at risk
• Content: Remind them that a few payment attempts have failed. This is a good time to mention the risk of losing access to the service or their data. Reiterate that updating their payment method will solve the problem instantly.

This is the last email before the subscription is canceled. Be direct but fair.

• Subject: Final notice: Your [Product Name] account will be closed in 3 days
• Content: Clearly state that this is the final attempt to resolve the issue. Inform them of the exact date the subscription will be canceled and what that means (e.g., loss of access, data deletion). Many companies offer a “grace period” where the user can still update their details to reactivate the account without losing anything.

To understand if your dunning strategy is working, you need to track the right metrics.

• Involuntary Churn Rate: The percentage of customers who leave due to payment failure, not an active cancellation. Your dunning process directly impacts this number.
• Recovery Rate: The percentage of customers who successfully resolve their payment issue and are retained after entering the dunning process. A high recovery rate is the primary goal.
• Days to Recover: The average time it takes for a customer to update their payment information after the first failure. A shorter recovery time means less revenue at risk.
• Customer Lifetime Value (LTV): By recovering customers who would have otherwise churned, you are preserving their LTV. This is a great way to tie your dunning efforts directly to revenue.

While building a robust dunning system from scratch is complex, modern identity and billing platforms like Kinde can handle much of the underlying infrastructure for you.

Kinde’s billing engine is built on Stripe, which includes powerful, pre-built dunning capabilities. When you use Kinde to manage your SaaS subscriptions, you can configure dunning settings directly within Stripe’s dashboard. This allows you to:

• Automate payment retries using Stripe’s smart retry logic.
• Customize and trigger dunning email sequences.
• Direct users to a secure, Kinde-hosted page to update their payment details.

By connecting Kinde to your Stripe account, you can manage subscription plans, handle upgrades and downgrades, and automate dunning without building the complex logic yourself.

For more information on setting up and managing subscription plans with Kinde, you can explore the official documentation.

• Create plans
• Subscription upgrade and downgrade methods