Disputed invoices are one of the most common financial challenges faced by growing businesses. Whether customers dispute a single element or the whole invoice, such incidents can present real challenges and put pressure on cash flow. In addition to the financial shortfall, there is also the time and energy required to resolve the dispute.
The unfortunate reality is that no matter how watertight your billing process might be, an inconvenient invoice dispute is likely to occur at some point. This is why it is so important to have a resolution strategy in place.
A disputed invoice occurs when a customer disagrees with the invoice issued by a business and refuses to pay. There can be multiple reasons for this, such as issues with the quality of the goods and services provided, pricing matters, or concerns surrounding the legitimacy of the invoice. Customers may also be unable to pay the invoice due to cash constraints – or may simply be looking for a way to avoid paying altogether.
To understand dispute management and how it can be effectively implemented, it is important to first understand the common causes behind disputes.
There are several underlying causes of invoice dispute, which include:
Having a clearer understanding of why disputes happen can help you develop systems and strategies to limit their occurrence.
The most common reasons for disputed invoices include:
Disputed invoices can impact your business, especially if they are mishandled. Consequences of invoice dispute mishandling may include:
Proactive measures can help prevent disputes – and ensure your team is aligned on how to handle invoice disputes if they arise. Invoice dispute management measures can include:
There are varying legal time frames and policy considerations when disputing an invoice that depend on the location and nature of the business. It’s important to be aware of the invoice dispute law in the jurisdiction of the business and incorporate an invoice dispute time limit into business policies.
Invoice disputes can be a significant challenge, with a range of consequences, including loss of revenue, reputational damage, and even limiting business growth. Visit our invoicing resources to learn more about payment terms, managing and resolving invoicing issues.
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