Keep Calm and Collect: Handling Invoice Disputes
by Erica Nelson on December 02, 2014
A number of things can delay invoice payments. The invoice or payment may truly be lost in the mail, or the client may be unable to make prompt payment due to cash flow issues. One common business-to-business payment delay is rooted in invoice disputes. Companies billing or collecting from other businesses can take precautions to reduce the impact of invoice disputes on incoming payments. In this post, we’ll review a few of those precautions.
Create Accurate Invoicing Processes
In a July 2013 survey of 100 accounting executives, 49 percent of participants said a top reason business customers didn’t pay invoices was that the purchase order information on invoices was incorrect or missing. It should go without saying, but generating accurate invoices is a top way to prevent invoice disputes and payment delays. Invoice accuracy means all items, units, and prices on an invoice are exactly as quoted to the client. The client’s billing name and address must be correct to avoid mailing delays, and accurate purchase order numbers are essential. Particularly when billing large companies, the right purchase order number may be the only thing that allows accounting clerks to cut a payment check.
Strong Invoice Backup
Often, when information on an invoice is disputed, the client company will acquiesce and make payment if clear data is presented that backs up the invoice. Businesses should keep copies of quotes and contracts, have clients sign off with a signature or email agreement on all orders, and save all communications regarding products or services. Even if documentation doesn’t result in client payment, it is essential for success if nonpayment becomes a legal matter.
Clear Resolution Communication
After responding to client concerns about invoice accuracy or other problems, collecting companies should provide a plan for payment resolution. Outline the steps for a satisfactory resolution in clear, professional language; sending the information in writing provides additional documentation should the invoice dispute continue. Your resolution may be a demand for full payment within a certain time period, a request for partial payment on an undisputed part of the invoice, or an offer of custom payment arrangements to bring an account current.
Keep Calm and Keep the Client
Training all collections employees to remain calm, even when the client isn’t, is important to long-term branding and future business relationships. A business client that has a problem with an invoice isn’t a bad customer; in fact, if the issue is handled with professionalism and respect, that business may go on to order products and services for years, and the relationship may even be strengthened.
Invoice disputes are a part of doing business; they don’t have to erupt into harsh or negative exchanges. By staying organized, documenting all agreements, and treating all accounts with respect, businesses can bring in cash flow without chasing away customers.
At D&S, we offer assistance for any stage of accounts receivable, from preventative measures to recovery. Contact us to learn more about the solutions we can offer to your business.