Smart Dunning

Smart dunning (also called intelligent dunning) is an advanced approach to payment recovery that uses machine learning and data-driven optimization to maximize the likelihood of recovering failed payments. Unlike traditional dunning—which follows a fixed schedule of retries and generic email notifications—smart dunning tailors every aspect of the recovery process to the individual customer and their specific failure context.

Traditional dunning systems typically retry a failed payment on a rigid schedule (e.g., days 1, 3, 5, and 7 after failure) and send the same templated emails to every customer. Smart dunning improves on this by analyzing historical recovery data to determine the optimal retry time for each customer based on factors like their bank, payment method type, failure reason code, and past payment patterns. It also personalizes the communication cadence, channel (email, SMS, in-app), and messaging tone based on the customer's engagement history and predicted response likelihood.

The impact of smart dunning over traditional approaches is significant. By optimizing retry timing alone—for example, retrying when the customer's bank is most likely to approve the charge—recovery rates can improve by 10-25%. When combined with personalized outreach that helps customers update their payment information proactively, smart dunning systems routinely recover 60-70% of failed payments compared to 30-40% for basic fixed-schedule approaches.