Dunning

In this day and age of digital finance, payment failures are unexpected; and the reasons are not always in your control. Transactions could get declined for various reasons starting from insufficient funds to expired cards or even connectivity issues. Dunning is the process of retrying payment attempts and sending payment reminders to customers when a transaction gets declined.

With Chargebee's Dunning feature, you can send email reminders to your customers asking them to update payment details and schedule payment retries at intervals to ensure revenue can be recovered. After the final payment retry attempt, you can configure what should be the status of the subscription. Chargebee's Dunning applies to:

• Online payments
• Offline payments
• Direct debit payments
• One-time payments

While you do your best to handle retries for the best payment recovery, not all failed payments get recovered in the same pattern. Or more importantly, your account with the payment gateways could be blacklisted for reasons such as:

• Multiple retries causing a higher decline ratio
• Non-compliance with card association rules

Chargebee's Smart retry logic retries payments at dynamic intervals based on the type of gateway transaction errors, and it acts on the hard or soft declines accordingly.

Prerequisites

In Chargebee, you can configure dunning email notifications. These emails will be sent to your customers informing them about the payment failure and reminding them to make the payment or update the payment method.

• Enable Email Notifications v2 for your Chargebee site. This will allow you to send multiple email reminders to your customer, irrespective of the number of dunning retries configured.
• Once Email Notifications v2 is enabled, navigate to Settings > Configure Chargebee > Dunning for Online/Offline Payments, and enable Dunning for your Chargebee Site.

Smart Retry

Smart retry is an intelligent, built-in dunning logic that initiates payment retries based on the type of gateway transaction errors. Chargebee classifies gateway transaction error codes into hard and soft declines.

• Hard declines are errors that need your customers' or your intervention
• Soft declines are the ones that result from a temporary issue, like say connectivity issue, and can be retried for a successful recovery at a later time

Hard declines will not be retried until an update in payment method happens and for soft declines, based on the error category and the chances of recovery, Chargebee will suitably decide an opportune time to retry. This not only helps recover your revenue promptly but it does it in the best and safest possible way.

Dunning for Online Payments

Dunning for Online Payments is when Auto Collection is turned ON for a subscription and the initial attempt to collect the payment fails, Chargebee will retry payment collection and send emails to your customer informing them about the failed payment.

Based on your customer's payment method, you can set up:

• Dunning for Cards, e-wallet Payments
• Dunning for Direct Debit Payments

Dunning for Cards, e-wallet payments

These settings are applicable for your customers, who use payment methods, such as Cards, PayPal and e-wallet payments like Amazon Pay, Apple Pay, etc.

Log in to your Chargebee site and navigate to Settings > Configure Chargebee > Dunning for Online/Offline Payments > Dunning for cards, e-wallet payments.

• Activate Dunning: Enables dunning for cards, e-wallet payment methods. If this option is disabled, Chargebee will not retry to collect payments for card, e-wallet payment methods when the initial attempt fails, and the final action will be executed.

• Dunning Period: Dunning period is the time period (in days) during which an invoice will stay in dunning before the final action is carried out on the subscription and invoice. Chargebee will retry to collect payments during the dunning period. You can configure email notifications to be sent out to the customer within the dunning period. Final action will be executed at the end of the dunning period.

• Choose Automatic Retry Mode: These options decide how frequently Chargebee should retry to collect the payment from your customers. Here are the options to choose from:

• When dunning period ends, what happens to subscriptions?: If the invoice is still unpaid when the Dunning Period ends, you can define the final action taken on the subscription. You can choose to let the subscription remain active or cancel the subscription at once.

• When dunning period ends, what happens to invoices?: If the invoice remains unpaid at the end of the dunning period, this option lets to choose how the invoice should be handled. You can:

  • Mark the invoice as not paid,
  • Void Invoice
  • Write-off the invoice
  • Reverse the invoice, where the invoice is marked as Paid and an adjustment Credit Note will be created with reason code Subscription_Cancellation.

• Apply dunning setting whenever 'Future' and 'Trial' subscriptions become active: When the option is enabled and the payment fails for a subscription on the day it moves to ACTIVE state from trial state or future state, the invoice will go through dunning

• Dunning for one-time invoices: Enabling this option will start dunning for one-time invoices as well. The final action mentioned in 'When dunning period ends, what happens to invoices?' will be carried out. However, the subscription will remain uninterrupted.

• Dunning for advance invoices: Enabling this option starts dunning for advance invoices.

  • When the terms in the advance invoice are underway, then the final action mentioned in 'When dunning period ends, what happens to invoice/subscription?' are carried out.

  • However, if the terms in the advance invoice haven't begun as yet, the subscription does not get canceled (even if set to cancel in the dunning process). Instead, a cancellation is scheduled for the end of the current term and the full amount gets refunded as a credit note. If the payment has not been collected as yet, an adjustment credit note is created. If the payment has been partially collected, the amount that has been collected is refunded as a refundable credit note, while the remainder is refunded as an adjustment credit note.

Dunning for Direct Debit Payments

This setting is for your customers who use direct debit payments such as SEPA (via GoCardless, or Adyen), ACH (via Stripe) or Authorize.Net) to make payments.

• You can select the desired number of retries between 1 and 5 to collect payments in this case.
• It usually takes 5-7 business days for the payment service provider (Stripe, GoCardless) to confirm the payment status to Chargebee.
• When the payment service provider confirms that the payment is failed, Chargebee will initiate the next automatic retry to collect payment.

To setup dunning for direct debit payments, navigate to Settings > Configure Chargebee > Dunning for Online/Offline payments > Dunning for Direct Debit Payments and here you will find the following options to configure dunning for direct debit payments in your Chargebee site:

• Activate Dunning: Enables dunning for direct debit payments. If this option is disabled, Chargebee will not retry to collect payment when the initial attempt fails, and the final action will be executed.

• Dunning period: Dunning period is the time period (in days) during which an invoice will stay in dunning before the final action is carried out on the subscription and invoice. Chargebee will retry to collect payments during the dunning period. You can configure email notifications to be sent out to the customer within the dunning period. Final action will be executed at the end of the dunning period.

• Chargebee's retry frequency: This indicates the number of retries that you want for each failed payment. You can select between 1 to 5 retries. While Chargebee suggests a retry frequency of only 2 attempts, you can check with your payment gateway if you'd like to set a higher limit.

• What happens to subscription when dunning period ends?: This is the final action taken on the subscription if the invoice is still unpaid when the defined Dunning Period expires. You can choose to let the subscription remain active or cancel the subscription once.

• When dunning period ends, what happens to invoices?: If the invoice remains unpaid at the end of the dunning period, this option lets to choose how the invoice should be handled. You can:

  • Mark the invoice as not paid,
  • Void Invoice
  • Write-off the invoice
  • Reverse the invoice, where the invoice is marked as Paid and an adjustment Credit Note will be created with reason code Subscription_Cancellation.

• Apply dunning setting whenever 'Future' and 'Trial' subscriptions become active: If the payment fails for a subscription on the day it moves to ACTIVE state from trial state or future state, you can enable dunning for such subscriptions

• Enable dunning for one-time invoices: Enabling this option will start dunning for one-time invoices as well. The final action will be carried out. However, the subscription will remain uninterrupted.

Dunning for Offline Payments

Chargebee allows you to collect payments offline via cash, checks, bank transfers, etc. Dunning for offline payments allows you to send email reminders to the customer.

Log in to your Chargebee site, and navigate to Settings > Configure Chargebee > Dunning for Online/Offline Payments > Dunning for Offline Payments > Enable. Once enabled you'll find the options to setup:

• Dunning Period: Dunning for offline payments is initiated the day the invoice is generated. During the dunning period, Chargebee will send email notifications configured for offline dunning. At the end of the dunning period, if the invoice is still not paid, final action will be executed. If offline dunning is disabled, Chargebee will not send email notification and the invoice will continue to remain in the payment due state.

• When dunning period ends, what happens to subscriptions?: If the invoice is still unpaid at the end of the dunning period, you can choose to either cancel the subscription or retain it as active.

• When dunning period ends, what happens to invoices?: If the invoice remains unpaid at the end of the dunning period, this option lets to choose how the invoice should be handled. You can:

  • Mark the invoice as not paid,
  • Void Invoice
  • Write-off the invoice
  • Reverse the invoice, where the invoice is marked as Paid and an adjustment Credit Note will be created with reason code Subscription_Cancellation.

• Apply dunning setting whenever 'Future' and 'Trial' subscriptions become active: If the payment fails for a subscription on the day it moves to ACTIVE state from trial or future state, you can enable dunning for such subscriptions

• Enable dunning for one-time invoices: Enabling this option will start dunning for one-time invoices as well. The final action mentioned in 'When dunning period ends, what happens to invoices?' will be carried out. However, the subscription will remain uninterrupted.

Dunning for 3DS Payments

If your business is based out of Europe or has a significant customer base in the EEA, it is recommended that you authenticate payments via 3D Secure. This is to ensure that you are SCA compliant and in line with the PSD2 regulation.

To be compliant, complete Chargebee's SCA checklist. On completion, you can also recover failed 3DS payments with ease.

3DS failures are hard declines and need customer intervention. Therefore, even if you have configured Custom Retry or Smart Retry in Chargebee, we will retry 3DS failures only the day before the dunning period ends, if no action has been taken by the customer throughout the dunning period.

Invoices in Dunning

When Auto-collection is turned ON for a subscription and the payment attempt fails, Chargebee initiates the dunning process. In the Invoices index page, you can click individual invoices to view retry-related information for that invoice.

You could find the Retry Attempts log with details such as the number of retries made, when the last attempt was, the status of the attempt and the reason for failure. Further, you can click Details option present against each retry attempt to know more about it.

You can also click the Collect Now button to initiate a payment attempt, which will be listed in the Payments and Credits log. Meanwhile, if you use Collect Now with Smart Dunning enabled, it will be considered a dunning attempt and relevant information will be included in the Retry Attempts log.

Manage Dunning

Chargebee will repeatedly attempt to collect payment from the customer based on your dunning configuration. However, if you would like to make an exception for your customer, or you were informed that the payment will be made on a specific date, you can Stop or Pause dunning for the invoice in Chargebee.

Pause Dunning

If you pause dunning till a specific date, Chargebee will try and collect payment on the expected payment date.

There are two scenarios to consider when setting an expected payment date:

• Expected payment date falls within the dunning period: Chargebee will put retry attempts and emails on hold until the expected payment date. On the expected payment date, Chargebee will attempt to collect the payment. If the payment doesn't go through, Chargebee will continue dunning with the remaining retries and email notifications.

• Expected payment date falls after the dunning period: Chargebee will put dunning retries and email notifications on hold until the expected payment date. On the expected payment date Chargebee will attempt to collect the payment for one last time. If the payment doesn't go through, Chargebee will execute the final action set for the subscription (cancel or retain as active).

Using Chargebee API

You can also pause dunning using this API endpoint for Payment Due invoices that have been enabled for Auto Collection.

Resume Dunning

You can resume dunning for a dunning paused invoice at any point during the pause period. Chargebee will resume the dunning retries that remain after the pause period and not attempt retries that have elapsed during the pause period.

Using Chargebee API

You can also resume dunning using this API endpoint for Payment Due invoices that have been previously paused.

Stop Dunning

If you choose to stop dunning, Chargebee will neither retry to collect payments nor send dunning email notifications to your customers. Once stopped, you cannot restart dunning for the invoice again. The invoice will be marked as Not Paid. However, the subscription will remain uninterrupted.

When you stop dunning forever, you can capture an Expected Payment Date and this information will be saved for further reference.

Using Chargebee API

You can also stop dunning using this API endpoint API.

Dunning Email Notifications

You can configure emails to be sent out to your customers informing them about the payment failure as well as reminding them about the unpaid invoices and any necessary action to be taken at their end, if any.

The emails can be sent irrespective of the dunning attempts, which means you can send multiple emails to your customer within the dunning period.

Chargebee's Dunning v2 works exclusively with Email Notifications v2.

Configure the email notifications for dunning by navigating to Settings > Configure Chargebee > Email Notifications > Dunning for Online Payments/Dunning for Offline Payments.

Here you'll find a list of emails that can be edited and configured before sending them to your customers during the dunning period.

You can enable the email notification, edit the content and even configure when the emails should be sent over.

Chargebee will continue to send dunning reminder emails to your customers until the invoice is paid or until the dunning period expires.