Invoices dispute management

Managing customer disputes is a key step in the Quote to Cash process of any business. Indeed, disputes are the consequences of all the existing issues in company's internal processes. They come from:
  • The bad quality of production and / or performing service.
  • The lack in commercial contractualisation.
  • Administrative reasons.
  • Delivery.
  • Invoicing errors.
  • ...etc.
They represent therefore many opportunities to improve the organization and quality of existing processes.

Disputes are mainly sources of delay in payments as invoices affected by a dispute are not paid by dissatisfied customers. As a reminder, to be recoverable a invoice must be:

  • Valuable (to be assessed in cash).
  • Due (due date is passed).
  • Certain (cannot be contested by the buyer).
A dispute makes the receivable concerned by the dispute uncertain, which prevents any effective recovery action. In the event of legal action, the court shall first determine the true nature of the receivable (it cannot be contested). If it is not established, the seller's cause will not be successful.

In addition, dispute adversely affect customer satisfaction, especially if they are not resolved quickly.
Disputes are therefore a source of pain for businesses (cash flow pressures due to delays in payments, increase of working capital, loss of credibility and loss of time spent resolving the dispute ... etc..) but may be the starting point to identify internal problems and improve the products and services sold.
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    Disputes management in My DSO Manager

    My DSO Manager includes an effective process for identifying and handling disputes. Invoices disputed are qualified with a dispute status (eg Price dispute, quality dispute...) and a comment detailing the problem.

    This information is sent to a resolver (sales manager ...) who has to fix the dispute.

    The disputed debts are then driven through the disputes report that allows to monitor all open disputes and to chase up internal actors responsible for the resolution. See more with online demo.

Disputes and Credit Management

The identification and treatment of disputes are closely related to management of customer receivables and cash collection. The problem they generate must be integrated into the collection process, whose objective is to obtain payment of bills on their due date.

Thus, the first collection action is done before the due date of the invoice in order to ensure that there is no dispute preventing the payment of the invoice.

If there is dispute, this preventive recovery action allows to detect it as soon as possible and to resolve it as quickly as possible in order to get paid the bill. This helps to speed up the collection process and the payment may be done on the due date despite the dispute, which has been resolved in the meantime.

Dispute management process

A process of disputes management must be established in the company to determine the roles and responsibilities of each department involved and ensure proper consideration of the disputes by the organization.

Nothing is worse than leaving aside disputes or treat them "when we have time." Studies have shown the impact of litigation on customer satisfaction:
  • If untreated or poorly treated, the effect is very negative.
  • If rapid and effective resolution, customer satisfaction is ultimately greater than it would have been if there had been no dispute!
Indeed, when a dispute is quickly resolved, the seller shows to the buyer his consideration he has for him and gets a commercial advantage ... and bills paid.

Dispute management process

Key factors of success are:

  • Transversality: sharing and understanding of the process by the various departments involved.
  • Determination of service that is accountable to management on the volume and length of litigation. It is this service which will boost stakeholders to accelerate the resolution of disputes. In large companies, it is relevant that this mission belongs to Credit Management / Collection department.
  • Fluidity of exchanges and actions between those responsible for the collection, administration, sales and trade.

Dispute types

There are different types of disputes for which treatment may be different because of their nature.

For example, a dispute related to a billing error (bad wording, error on the price ... etc..) can be solved by the sales administration when a technical dispute will be considered by the sales manager or the technician.

It is therefore necessary to categorize disputes to improve their treatment. For example:

  • Quality dispute: includes disputes concerning the quality of products and / or services performed.
  • Price dispute: price differential between the charged and the one negotiated by the client.
  • Administrative dispute: problems of missing or poorly written documents (invoices, purchase orders, packing list ... etc..).
  • Event date dispute: for example an invoice issued so that the material was not sent to the client.
  • Missing goods dispute: differences between what was billed and actually delivered.
  • Double billing dispute: a delivery is billed twice by mistake.
  • ...
For each type of dispute, a maximum period for a resolution can be set. For example, a price dispute, simple to control and treat must be resolved within eight days when a quality issue may be more complicated to resolve and take more time.

Collect disputed invoices

The process of debt collection is stopped during the treatment period of the dispute. It will resume when the dispute is resolved with a new due date equal to the date of resolution of the dispute.

The first action is a collection action level 1 with the aim of obtaining a promise to pay immediately.

Late payment penalties and disputes

It is common sense to assert that late payment penalties do not apply to payment delays due a dispute proved. However, they are applied when the dispute is not real and / or resolved as the invoice reverting certain, valuable and due.
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