Dealing with disputed invoices can be challenging, especially if your customer is squabbling simply to avoid payment.

The most important thing is to take time to understand what the dispute is. Then, isolate and seek to resolve the issue as quickly as possible. If you believe the dispute is bogus, explain your reasons and press on with enforcement proceedings.

It’s essential that you act swiftly because you want to get paid. When you’re tolerant with overdue invoices there’s a danger that you may lose all of your money. The company you’re chasing could be insolvent, struggling on its last legs, and simply robbing Peter to pay Paul.

Disputed invoices must dealt with urgently because you don’t know if the company is doing the same thing with other suppliers. Never sit on a dispute because it won’t simply go away.

Still, you don’t want to magnify the problem by throwing oil on the fire or fanning the flames. When someone says they’re not paying, it’s very easy to become irrational, hot-headed and start exchanging threats.

Before you know it, you’re trading accusations, the issue remains unresolved, and no one’s suggesting a way to end the dispute.

Ask the customer to set out their dispute in writing

Avoid this and get straight down to business. Ask the customer to clearly set out their dispute in writing, supported with whatever documentary evidence they have.

You can give them 7 or 14 days (or less) to respond. If they reply without any documentary evidence there’s probably no need to take the dispute seriously.

Also, never accept a dispute verbally over the telephone. Always ask the complainant to articulate their dispute in writing. A person with a genuine dispute can do that. Someone with a spurious claim will struggle, unless they’re going to manufacture a dispute.

If the response comes back with supporting evidence; deal with the disputed invoices straight away. Grasp the issue and address it quickly. Sometimes you may have to concede some form of value (monetary amount of the invoice) in order to get paid, that’s just business.

To avoid these types of issues, it’s always best to ensure that your agreement terms and conditions clearly set out the process for dealing with disputes.

Ensure that both parties agree to the terms before trading takes place, so if there is a dispute they’ll automatically submit to the process set out in the agreement.

Disputes can be complex and it’s sometimes easier to let a third party handle these issues while you concentrate on running your business. For more information, visit our 123Pay credit management page.

The post How to deal with disputed invoices first appeared on Company Debt Recovery.

Earlier this year, I&L received a phone call from a distressed subcontractor (subbie). They claimed that for months, West Midlands construction firm the Shaylor Group had been ignoring their requests for payment of an overdue invoice.

After a brief consultation, they instructed us to recover the debt on their behalf. Although we were made to jump through a lot of hoops and loops, eventually the Shaylor Group paid £44,000 to settle the invoice, and cover our expenses.  

Then, just a few months later, the Shaylor Group fell into administration owing almost 700 creditors £47m. The sad thing is; most of those creditors are small companies who unknowingly provided labour and goods they purchased virtually interest-free.

In effect, they became defacto lenders, supplying labour and materials, even though their invoices will probably remain unpaid.

Invariably in these types of situations, unsecured creditors get shafted and the big companies end up benefitting from all the resources without ever having paid for them. 

Update terms and conditions

To avoid this happening to your company, make sure all quotes, sales orders, and contracts include a provision that states counterclaims nor any monies you owe may be set-off against an overdue payment.

These conditions are essential because they compel the debtor to pay the invoice promptly. They also ensure the overdue payment remains independent of any claim made against your company.

Without these stipulations, it’s relatively easy to circumvent payment of an invoice; simply fabricate a dispute. If debtors repeatedly ignore your invoices, why not consider instructing a third party to recover the funds on your behalf?

Factoring in the cost of a third party to manage credit procedures can be a good idea. In many instances, they’ll collect payment for overdue invoices more professionally and dispassionately than you.

Furthermore, removing the burden of invoice-chasing frees up valuable time that can be spent building your business.

Feel free to send I&L examples of your company’s sales contracts and orders for us to assess their effectiveness in credit management and commercial debt recovery.

The post Tips for collecting long-standing debts first appeared on Company Debt Recovery.