What is a dispute?
In the terminology of credit management, the dispute follows a customer dissatisfaction which is, a priori justified. The customer does not validate payment of the invoice because he has a good reason to do so. This notion is different that litigation, which means a firm disagreement between the seller and the buyer, or unpaid debt; not justified, which can lead to legal action.The main sources of disputes
- Quality issues production and/or service delivery.
- Differences between the contract or order and what was delivered by the seller.
- Administrative problems: absence of purchase order, wording errors, absence of documents and supporting documents, etc.
- Logistical and delivery problems.
- Billing errors: wrong price, early billing or billing addressed to the wrong entity, etc.
Disputes are mainly sources of late payment, the invoices concerned by disputes are not being paid by dissatisfied customers. Let's remember that to be recoverable, a debt must be:
- Liquid (which can be valued in cash).
- Due (the due date has been reached).
- Certain (which cannot be disputed).
Furthermore, disputes negatively influence customer satisfaction, especially if they are not resolved quickly. In the event of a significant recurrence, they can lead to serious damage and the loss of the customer.
-
Disputes management in My DSO Manager
My DSO Manager integrates a collaborative and efficient process for identifying and handling disputes which, by nature, concern several departments within the company. The invoices concerned are qualified with a dispute code (for example price dispute) and a comment detailing the problem. This information is sent to a resolution manager (the sales representative for example) who handles the dispute and responds to the collector
Disputed debts are then managed using the disputes report which makes it possible to contact the internal actors responsible for their resolution. An organization's performance in resolving disputes quickly and addressing their causes reflects its quality. The software makes all of this possible. 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.
Disputes 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!
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.
- etc.
Collect disputed invoices
The process of Accounts Receivable collection is stopped during the treatment period of the dispute. That does not mean the collector does nothing! He or she has to chase up the resolver to get the issue fixed. Collection process 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.