A dunning email template is a message sent when a subscription payment fails, asking the customer to update their payment details. A good sequence sends a helpful email the day the payment fails, reminders on days 3, 7 and 12, and a final notice when the subscription ends on day 14, each with a one-click link to update the card. Pair it with smart retries and pre-expiry warnings.
Key takeaways
- About a third of churn can be failed payments: Recurly's July 2026 network data showed involuntary churn of 1.25% against total churn of 3.60%.
- Warn customers 30 and 7 days before their card expires. It's the cheapest recovery there is.
- Use five short emails over 14 days, each with one link, and keep access during a grace period.
- Make every email sound like a helpful person, never a debt collector.
- Stop retries the moment a customer cancels, and include a clear cancel option for those who want out.
In my first business, a marketing agency, cash came in lumps.
We'd win a few projects and max out. Then the projects would wrap up, and I'd sit there wondering how I was going to pay everyone. Feast or famine. It's the reason I fell in love with recurring revenue, and the reason I wrote The Subscription Playbook.
But here's something I didn't appreciate until later. Recurring revenue only recurs if the payment actually goes through.
Cards expire. Cards get replaced. Banks flag a renewal as fraud. Across Recurly's network in July 2026, involuntary churn (subscriptions lost to failed payments) was 1.25%, against total churn of 3.60%. That's about a third of all churn, from customers who mostly never meant to leave. (The churn benchmarks break it down by industry.)
The fix isn't glamorous. It's a handful of short, friendly emails. Here they are, ready to copy. For the full system behind them (card updaters, smart retries, grace periods), read involuntary churn and failed payments.
The sequence at a glance
| When | Tone | |
|---|---|---|
| 30 days before card expires | Pre-expiry 1 | Helpful |
| 7 days before card expires | Pre-expiry 2 | Helpful |
| Day 0: payment fails | Dunning 1 | Helpful |
| Day 3 | Dunning 2 | Reassuring |
| Day 7 | Dunning 3 | Clear |
| Day 12 | Dunning 4 | Direct |
| Day 14 | Dunning 5: subscription ended | Warm |
| When payment succeeds | Recovered | Thankful |
Line the emails up with your retry schedule, so the next retry happens soon after each email.
Pre-expiry 1: 30 days before the card expires
Subject: Your card ending [1234] expires next month
Hi [First name],
Just a heads-up: the card we have on file for your [Plan name] subscription expires at the end of [Month].
Update it in about 10 seconds so nothing interrupts your [deliveries / access / bookings]:
[Update payment details]
Thanks,
[Name], [Business name]
Pre-expiry 2: 7 days before
Subject: Quick one: please update your card before [Expiry date]
Hi [First name],
Your card ending [1234] expires on [Expiry date]. Your next payment of A$[Amount] is due on [Billing date].
[Update payment details]
If you've already updated it, thank you, and please ignore this.
[Name]
Dunning 1: Day 0, payment failed
Subject: Your payment didn't go through
Hi [First name],
We tried to process your [Plan name] payment of A$[Amount] today, but it didn't go through. It happens, usually because a card has expired or been replaced.
You can update your details here: [Update payment details]
Your [access / next delivery] continues as normal while you sort it out.
[Name]
Dunning 2: Day 3
Subject: Still having trouble with your payment?
Hi [First name],
Your [Plan name] payment of A$[Amount] is still outstanding. Here's a one-click link to update your card or switch to direct debit:
[Update payment details]
If something's not right, just reply and I'll help.
[Name]
Dunning 3: Day 7
Subject: Your [Plan name] is on hold until payment is sorted
Hi [First name],
We still haven't been able to collect your payment of A$[Amount], so we've put [your next delivery / premium features] on hold.
Everything else is saved and waiting. Update your details and we'll restart straight away:
[Update payment details]
If you meant to cancel, you can do that here instead: [Cancel link]
[Name]
Dunning 4: Day 12
Subject: Last reminder: your subscription ends on [End date]
Hi [First name],
This is our last reminder. If we can't collect your payment of A$[Amount] by [End date], your [Plan name] subscription will end.
Keep it going: [Update payment details]
[Name]
Dunning 5: Day 14, subscription ended
Subject: Your [Plan name] subscription has ended
Hi [First name],
We weren't able to collect your payment, so your [Plan name] subscription ended today. You won't be charged again.
Your [account / history / preferences] are saved for [X days]. If you'd like to come back, it takes one click:
[Restart my subscription]
Thanks for being a customer.
[Name]
Recovered: payment succeeded
Subject: Thanks, you're all sorted
Hi [First name],
Your payment of A$[Amount] went through, and your [Plan name] is fully active again.
Receipt: [Link]
[Name]
See how much failed payments cost you
Upload a Stripe subscriptions export to the free Stripe Export Analyser and see your churn, including what failed payments are taking.
SMS and in-app banner copy
SMS (day 0): [Business name]: Your payment of A$[Amount] didn't go through. Update your card here: [Short link]
SMS (day 12): [Business name]: Last reminder. Your [Plan] ends on [Date] unless your payment is updated: [Short link]
Banner: Your last payment didn't go through. Update your card to keep [Plan name] active. [Update now]
The banner matters. Plenty of people ignore billing emails but still log in, and a banner catches them while they're using you.
What makes dunning emails work
- One link, one job. The update link should open the payment form directly, already logged in where your platform allows.
- Short subject lines that say what happened. "Your payment didn't go through" beats "Account notice."
- No blame. Assume it's the card, not the customer. It usually is.
- Plain text over designed templates. They read like a note from a person, not a bill.
- A second payment method. Offer direct debit in the update form. Bank accounts don't expire the way cards do. And an annual plan means one payment that can fail instead of twelve; see annual vs monthly plans.
The Australian angle
Recovering a failed payment is fine. Charging someone who has canceled is not. The ACCC's December 2025 case against HelloFresh and Youfoodz alleges more than 100,000 customers between them were charged after canceling before the stated cut-off. Make sure retries stop the instant a subscription is canceled.
From 1 July 2027, subscriptions must also have an easy, straightforward way to cancel. That's why Dunning 3 includes a cancel link. Someone who wants out should be able to leave, not be chased for two weeks. This is general information as at October 2026; see Australia's subscription trap laws and check your setup with your adviser.
When dunning won't help
If a customer hadn't used your service for weeks before their card failed, the failed payment is really a quiet cancellation. Dunning emails won't fix that. Look at their reasons with an exit survey and work on engagement using the churn reduction playbook.
What to do next
- Split last month's churn into voluntary and involuntary, using the churn rate formulas.
- Turn on your billing platform's card updater and smart retries.
- Load the eight emails, the SMS and the banner, and line them up with your retries.
- Track your recovery rate monthly.
Every recovered payment is cash you've already paid to acquire. For a small business, that can be the difference between a comfortable month and a tight one. More in subscriptions and cash flow.
Free Subscription Profit Review
Australian business owners can book a free 30-minute review with a BPAG Accountants adviser. An honest conversation about:
- whether a subscription model could work for your business
- how recurring revenue could cover your fixed costs each month
- how it could lift what your business is worth
No cost, no obligation. General information only until we understand your situation.
Frequently asked questions
What does dunning mean?
Dunning is the process of contacting customers about overdue or failed payments. The word is old: to 'dun' someone meant to press them for a debt. In subscription businesses it usually means the automatic sequence of retries, emails, SMS and in-app messages that runs when a recurring card or bank payment fails, aiming to recover the payment before the subscription lapses.
Should I pause access as soon as a payment fails?
Usually not. Most failed payments are expired or replaced cards, not customers trying to get something for free. Keeping access for a grace period of 7 to 14 days while you retry and email gives the customer time to fix it, and cutting them off on day one can turn a card problem into a cancellation. For physical goods, hold the next shipment until payment clears.
How many times should I retry a failed card?
Let your billing platform's smart retry feature decide when possible, because it times retries for when they're most likely to succeed. Stripe's recommended default for Smart Retries is 8 tries within 2 weeks. Avoid retrying every hour, which can trigger more bank declines. Line your emails up with the retry window so the customer's update and the next retry happen close together.
Can I charge a late fee on a failed subscription payment?
Only if it was clearly disclosed in your terms before sign-up, and it reflects a genuine cost. In Australia, a fee that's out of proportion to your real loss can be challenged as an unfair contract term. For most subscription businesses a late fee isn't worth the ill will. Recovering the payment and keeping the customer is worth far more.
Should dunning emails come from billing@ or a person?
A person's name tends to feel more helpful and less like a debt notice, and it makes replying natural. Use a consistent sender, such as 'Sam at [Business]', from an address that accepts replies and is monitored. Make sure the domain is properly authenticated so these emails land in the inbox, because a dunning email in a spam folder recovers nothing.
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Robert Coorey, MBA
Robert is the author of The Subscription Playbook and Feed a Starving Crowd and a Director at BPAG Accountants in Sydney. More about Robert.
Sources
- Recurly, Churn rate benchmarks (July 2026 network data)
- Stripe Billing, revenue recovery figures
- Stripe Documentation, Automate payment retries (Smart Retries)
- ACCC media release, HelloFresh and Youfoodz in court over alleged subscription traps (16 Dec 2025)
- The Subscription Playbook, Robert Coorey (2022), Chapters 1 and 9
Facts and prices checked 27 October 2026. Spotted something out of date? Tell us.