A customer replies to an invoice with one line: "This is not what we agreed." The invoice is for 4,800, due in ten days. Accounts sends the standard reminder anyway, the salesperson promises a discount on the phone, and the owner finds out a month later when the money still has not arrived. Nobody is lying. Three people simply handled the same problem without talking to each other.
A disputed invoice is not a late invoice. A late invoice needs a polite reminder, covered in chasing a late invoice politely. A disputed one needs an answer to a question: is the customer right? This article gives a short routine for that.
Recognise a dispute early
Treat an invoice as disputed when the customer says it is wrong, asks for a correction, or pays only part of it with a comment. Silence is not a dispute. Also count the vague signals: "we need to check this internally" or "our manager has questions".
Mark the invoice as disputed in your records on the same day. This one step stops automatic reminders, which are the fastest way to annoy a customer who has a fair point.
Find the cause in three places
Most disputes come from a small number of causes. Check them in this order, and do it before you write back with an opinion.
- The order. What was agreed, in writing? A quote, an email, a signed order. Compare price, quantity and scope with the invoice.
- The delivery. What was actually delivered and when? A delivery note, a completed ticket or an acceptance message. Missing or late delivery is the second most common cause.
- The invoice. Wrong amount, wrong entity, wrong purchase order number, a missing discount, tax applied incorrectly, a duplicate. Many disputes end here, with a plain mistake on our side.
Write down what you found in three lines: what the customer says, what the documents say, and whether the two match. If they do not match, decide whether the error is yours, theirs or a misunderstanding about scope.
One person talks to the customer
Choose one owner for the case. It is usually the person who knows the customer best, such as the account owner, with accounts providing the documents. The owner does three things:
- calls or writes to the customer within two working days to confirm they have understood the problem;
- shares the result of the check, in plain words and without defensive wording;
- proposes a concrete next step with a date.
Everyone else stays out of the conversation. Accounts does not send reminders, support does not offer credits and sales does not promise discounts. Tell the team who the owner is, so a customer who phones a colleague is passed on.
Settle quickly, and separate the undisputed part
There are three honest outcomes.
- We were wrong. Say so, issue a corrected invoice or a credit note, and send it quickly. Rules for credit notes are in returns, refunds and credit notes.
- The customer is wrong. Send the documents that support the invoice, explain calmly and keep the date for payment. Do not escalate in the first message.
- It is unclear or partly both. Agree a compromise only if the owner has the authority to do so. Decide in advance what that authority is, for example a limit of a few percent of the invoice.
If only part of the invoice is disputed, ask the customer to pay the part they agree with now. It keeps cash moving and narrows the question to what is really in doubt.
Confirm every agreement in writing, even a short email: what changes, what the new amount is and when it is due. Check your payment terms if the due date moves.
Close the case and learn from it
A dispute is closed when the corrected invoice is paid or the credit note is issued, not when the conversation ends. Then add a short note to the case record:
- the cause, in one sentence;
- who fixed it and how long it took;
- what would have prevented it, for example a purchase order number on the quote or a delivery confirmation sent the same day.
Once a quarter, read the notes together. If three of five disputes come from missing purchase order numbers, the fix is a field in your quote template, not more patience.
If a dispute stays open for weeks and the amount is significant, formal debt recovery has its own rules, including statutory interest for late commercial payments in the UK. Check them before you threaten anything.
What to do this week
- Add a "disputed" status to your invoice list and stop reminders for those invoices.
- Write down who owns disputed invoices and what limit they can settle within.
- Make a one-page checklist: order, delivery, invoice.
- Review the last three invoices a customer questioned and note the cause of each.
- Add the most common cause to your quote or invoice template as a required field.
Sources
- GOV.UK, Late commercial payments: interest and debt recovery: the rules on interest and recovery when a business customer pays late.