The verdict in three sentences
A 72-day DSO means your customers fund their business with your cash, well beyond the 30-day default and the 60-day ceiling set by EU late payment rules. Dunning automation (email and SMS sequences, an embedded payment link, escalation to the account manager and then a formal demand) commonly brings DSO down to around 50 days within 4 to 6 months. For a Dublin SME with EUR 2.5 million in revenue, those 22 days are worth about EUR 150,000 of freed cash, for an investment of EUR 5,000 to 15,000 custom or EUR 100 to 400 a month in SaaS.
The reminder sequence that works in 2026
Effective dunning starts before the due date. A polite reminder at D-5 with a payment link alone settles a large share of delays caused by simple oversight. Then the sequence grows firmer, switches channels and brings in a human at the right moment.
| Step | Timing | Channel | Content | Observed settlement rate (ballpark) |
|---|---|---|---|---|
| Pre-due reminder | D-5 | Invoice attached, card or bank transfer link | 15 to 25 % of at-risk invoices | |
| Reminder 1 | D+3 | Polite reminder, payment link | 30 to 40 % of late invoices | |
| Reminder 2 | D+10 | Email + SMS | Firmer tone, late fees mentioned | 20 to 25 % of remaining |
| Call or sales task | D+20 | Phone, CRM task | Account manager or AR clerk calls | 15 to 20 % |
| Final notice | D+30 | Email + letter | Fixed compensation and statutory interest | 10 to 15 % |
| Formal demand | D+45 | Registered letter | Step before legal proceedings | Variable |
Automation runs the first four steps on its own and creates a task for the rest. It also stops automatically as soon as a payment is matched or a dispute is logged, avoiding the awkward reminder to a customer who has already paid.
Custom or SaaS: 2026 comparison
| Option | Upfront cost (excl. VAT) | Monthly cost | Accounting integration | Strengths | Limits |
|---|---|---|---|---|---|
| Manual reminders (Excel, Outlook) | EUR 0 | Internal time, 1 to 2 days a month | None | No tool to buy | Missed reminders, uneven tone |
| ERP or accounting software module | EUR 0 to 1,500 | EUR 0 to 80 | Native | Simple | Rigid sequences, no SMS |
| Credit management SaaS | EUR 1,000 to 3,000 setup | EUR 100 to 400 | Standard connectors | Fast, dashboards | Cost grows with volume |
| Simple custom automation | EUR 5,000 to 8,000 | EUR 50 to 150 (SMS, hosting) | Your ERP's API | Sequences tailored to your clients | 3 to 5 weeks |
| Full custom automation | EUR 9,000 to 15,000 | EUR 100 to 250 | API + bank reconciliation | Customer portal, risk scoring | 6 to 8 weeks |
Custom work wins when you run several companies, serve key accounts with supplier portals, or have your own rules (different reminders by account manager, sector or outstanding balance).
What the law says, and how automation applies it
In Ireland, the European Communities (Late Payment in Commercial Transactions) Regulations set a 30-day default payment term, with a maximum of 60 days unless expressly agreed. Late payment triggers statutory interest at the ECB reference rate plus 8 points and fixed compensation of EUR 40, 70 or 100 per invoice depending on the amount. The tool calculates and states these amounts automatically, which makes reminders more credible.
| Indicator | Before automation | After 6 months (target) |
|---|---|---|
| DSO | 72 days | 50 days |
| Share of invoices paid on time | 45 % | 70 % |
| Invoices over 60 days late | 18 % | 6 % |
| Monthly time spent chasing | 2 days | 3 hours |
| Formal demands per quarter | 25 | 8 |
Mini case study
Siobhan, CFO of an industrial maintenance SME in Dublin (EUR 2.5 million revenue, 400 active customers), has a 72-day DSO. Her receivables stand at about EUR 493,000. Bringing DSO down to 50 days cuts them to about EUR 342,000, or EUR 150,000 of freed cash.
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That lets her halve her use of an invoice finance line costing about 5 % a year, EUR 7,500 saved annually, plus 1.5 days a month of accounting time recovered (about EUR 4,300 a year). The custom automation costs EUR 9,000 excl. VAT and EUR 150 a month. Direct payback comes in under 11 months, not counting the EUR 150,000 that now funds two technician hires.
FAQ
How much does dunning automation cost?
Budget EUR 5,000 to 15,000 excl. VAT for a custom tool connected to your ERP, or EUR 100 to 400 a month for a credit management SaaS. SMS adds about EUR 0.05 to 0.08 per message.
How much can DSO drop?
A reduction of 15 to 25 days within 4 to 6 months is a realistic ballpark for an SME starting above 70 days. The main lever remains the pre-due reminder with a payment link.
Do automated reminders harm customer relationships?
Not if the tone escalates gradually and the tool stops as soon as a payment or dispute is recorded. Reminders signed by the account manager often get 20 to 30 % more replies.
Which accounting tools can be connected?
Most common packages (Sage, Xero, QuickBooks, Odoo, Microsoft Dynamics) offer an API or usable exports. File-based integration costs EUR 1,000 to 2,000 less than a full API build.
Can the tool apply statutory late fees?
Yes, it calculates statutory interest and the EUR 40 to 100 fixed compensation per invoice and includes them in reminders from D+30. Actually charging them remains a management decision.
Let's scope your project. Send us your current DSO, accounting software and monthly invoice count: we will price a dunning sequence between EUR 5,000 and 15,000, delivered in 3 to 8 weeks. Detailed quote within 48 h. WhatsApp +221 77 596 93 33.
Mohamed Bah
Fondateur, Kolonell
Passionate about digital and entrepreneurship in Africa, Mohamed has been helping Sénégalese businesses with their digital transformation since 2020. Founder of Kolonell, he believes every SME deserves a professional and accessible online présence.
