How do I deal with disputed invoices?

Late payment of invoices is often considered part and parcel of running a business but are you finding that your invoices are being delayed due to a dispute being raised? The longer the dispute, the harder it usually is to resolve. This can then cause lengthy delays in obtaining payment which can result in cash flow difficulties. So what can you do to avoid disputed invoices in the first place?

Setting a clear timeframe with your customers for when you will refer an unpaid account to a third party is a simple step that often incentivises payment. We are often contacted by businesses once they have exhausted their efforts to resolve a dispute and, in some instances, months have lapsed since the invoice was first sent. This is often when businesses can no longer sustain the non-payment and recovery of the debt becomes time critical.

Some common reasons for an invoice being disputed are:

• faulty goods
• poor service
• lack of funds to pay resulting in a dispute being raised to delay payment
• the cost.

Sometimes the dispute is genuine, but sometimes it is used simply to delay payment for as long as possible. There are certain steps that your business can take to minimise disputes, such as:

• having a signed written contract in place
• ensuring that the scope of the order for goods or services have been confirmed in advance
• making sure the order has been signed off/agreed by the appropriate person with authority.

Dealing with disputes is frustrating for many reasons and once a dispute is raised you risk not getting paid in full or incurring time and costs which might not be recovered. It is important to always keep in mind that some disputes are genuine expressions of dissatisfaction and to treat a customer as if they are simply trying to get out of payment or receive a reduction is a sure-fire way of losing them.

While all avenues should be explored to resolve a dispute to your customer’s satisfaction, you need to balance this with ensuring that the dispute is resolved in a timely manner. Often, the longer disputes are left unresolved, the more each party becomes entrenched in their position. Drawing a line at which point you will escalate an unpaid account to a third party is essential, whether that be 30 days, 45 days or another timeframe that you decide. At this point, if you have not resolved a dispute yourself then third party intervention from a company that has experience in resolving disputes is often the best solution. If negotiation still does not result in an amicable resolution, then they will be able to advise you on legal options open to you to recover the debt owed.