The Dunning Playbook: Proactive AR Management for SaaS, IT, and Agencies

By Sarah Jenkins, Operational Efficiency Expert

In the world of SaaS, IT, and digital agencies, recurring revenue is the lifeblood, but the volume of small, repeating transactions makes accounts receivable (AR) management uniquely challenging. Every missed payment, known as involuntary churn or subscription debt, chips away at your Monthly Recurring Revenue (MRR) and customer lifetime value (CLV).

Your collections strategy must be less about confrontation and more about proactive, automated customer service. This is your Dunning Playbook—a structured, empathetic, and system-driven approach to maintaining cash flow without sacrificing the B2B relationships you’ve worked so hard to build.

Phase 1: Prevention and Automation (Days -7 to Day 0)

The best collection is the one you never have to make. For high-volume businesses like SaaS and Agencies, automation is the most critical element of SaaS AR management.

1. Optimize the Upfront Deal Structure (The Pre-Collections Check)

For SaaS/IT: Ensure the payment method on file (credit card or ACH) is verified before service delivery. Use dunning management software that tracks card expiration dates and notifies customers 60-30 days in advance.
For Agencies: Clearly outline payment milestones (e.g., 50% upfront, 25% at milestone, 25% on completion) and define late fees in the contract. Customizing terms based on a client’s risk profile (credit check) reduces bad debt exposure from the start.

2. Implement Automated Dunning (The Gentle Nudge)

“Dunning” is the process of automatically communicating with customers to secure payment. For recurring revenue models, this is non-negotiable.

The Automated Dunning Sequence

Pre-Reminder 1
- Timing: 7 days before the due date.
- Channel: Email or In-App Notification.
- Tone: Friendly reminder, assuming they will pay on time.
Pre-Reminder 2
- Timing: 3 days before the due date.
- Channel: Email, or SMS (for lower-value, transactional services).
- Tone: Direct, including a clear, prominent link to the payment portal.
Post-Due 1 (The Crucial Step for SaaS/IT)
- Timing: Day 0 (immediately, or 1 hour after a failed payment).
- Channel: Automated Email and System Retry.
- Tone: Action-oriented. The system should immediately alert the customer to the failed payment and automatically retry the card. This is crucial for minimizing involuntary churn.

Phase 2: Internal Escalation and Relationship Preservation (Days 1 to 30)

Once automation fails, the human element takes over. The goal shifts from simple convenience to establishing the reason for non-payment while maintaining the relationship—a cornerstone of IT service collections.

3. The Proactive “Care” Call (Days 3-5 Overdue)

Do NOT start with a demanding collections call.

The Approach: Have the Customer Success Manager (CSM) or Account Manager—not the finance team—make the first call.
The Script: “Hi [Client Name], I noticed your invoice is a few days past due. I’m calling to make sure you’re not having any issues accessing the service/our platform, and check that the invoice landed with the right person. If there’s an internal payment issue, how can I help you route this?”
Why it works: This preserves the relationship and often reveals administrative errors (e.g., “It’s with our AP team”) or budget concerns that can be solved with a short-term payment plan.

4. Formal Escalation and The Stop-Work Notice (Days 15-30 Overdue)

This is the formal transition where the risk is acknowledged.

For SaaS/IT: Issue a formal email notification from the Finance Director that service will be suspended if payment is not received within 7 days. Suspending service (without deleting data) is a strong incentive for recurring revenue models.
For Agencies: Send a formal letter referencing the contract’s late payment clause. Stop all work on the client’s account immediately and communicate this clearly: “We regret that all non-essential work has been paused pending resolution of the outstanding invoice. Work will resume immediately upon full payment.”

Phase 3: The Write-Off or Sale Decision (Days 60+)

Once commercial debt moves past 60-90 days, its value to collect internally drops rapidly, and the costs (time, internal friction, opportunity cost) begin to exceed the potential reward. This is where strategic divestiture becomes the financially prudent choice.

5. Categorize and Triage Accounts (The 90-Day Rule)

By Day 90, you must make a final decision. Categorize the debt based on the collection attempts and outcomes:

Category A (Good Faith): Client responded, acknowledged the debt, but requested a payment plan. (Keep in-house, enforce the plan.)
Category B (Non-Responsive): Client is unresponsive to all communication channels. (High likelihood of strategic default or insolvency.)
Category C (Disputed): Client disputes the invoice. (Must be handled by an internal legal/sales team before collections.)

6. The Strategic Shift: Sell the Debt

For Categories B and C (if dispute is weak/unresolved): Continuing to chase these accounts internally is a drain on resources that could be focused on current customer revenue. This is the moment to consider a commercial debt broker.

The Benefit for You: Selling removes the debt from your books, instantly providing cash (even at a discount), and frees up your AR team to focus on the high-probability, current receivables. It prevents these aged accounts from turning into permanent dead weight.
The Broker Advantage: Specialized brokers, like Golden River Global, buy these aged portfolios in bulk. They are better equipped to pursue the debt efficiently because their core business is recovery, and they can leverage sophisticated skip-tracing and legal strategies that are uneconomical for a SaaS company or agency to manage in-house.

The Takeaway: Focus on Your Core Competency

Your success as a SaaS company, IT provider, or agency is built on innovation and client service—not collections. By adopting a proactive dunning playbook and establishing a clear cut-off point for divestiture (the 60-90 day mark), you protect both your cash flow and your valuable client relationships.

Don’t let aged debt consume your internal resources. Know when to automate, when to escalate, and when to strategically transfer the problem to a specialist.

Your Accounts Receivable team should be focused on the next 30 days of revenue, not the last 90 days.

Has your internal team hit the 90-day wall? Discover Golden River Global’s Aged MRR Solutions – Get a Free Portfolio Assessment.