6 friendly (yet effective) methods to handle invoice and payment disputes

Talking about money is never easy, especially when you’re a small business owner. But, unfortunately, there’s no avoiding it! There will come a time where you get a client or two who disputes an invoice, and you will have to manage it in a way that doesn’t damage your relationship.

If you want to prevent payment disputes (and know how to resolve them if they do come about), you have to implement effective credit control procedures. Here are 6 ways to manage invoicing and payment disputes easily and effectively.

1. Be organised

You don’t want to waste more time than you need to resolve payment disputes, so make sure to keep good records and be organised. You want to be able to find your agreed deliverables and any information you need on billable costs as quickly as possible.

2. Always agree on cost first

Before you complete a job or send an invoice, you have to set expectations with your client. Talk to them about the service you will be providing and by when and how much it will cost.

Agreeing on the billable cost before you undertake the work is essential to minimising any payment disputes. If you can follow up the discussion with a quote and having them agree to the proposal, even better! You’ll be able to refer back to this if you have any issues in the future.

3. State your invoicing terms as clear as possible

To ensure that your clients pay efficiently (and to nurture a consistent cash flow for your business), create a payment policy and make it clear. Your clients need to know how to make the payment, what your payment terms are and when they have to pay it. They’ll also need to be aware of the consequences if they miss deadlines.

4. Be friendly (but firm)

The worst thing you can do in a dispute is to immediately cave to what they want or to respond in a very emotional way. To avoid getting angry or frustrated with the client, make sure you have all of the documents and figures you need to justify your point. Then, you can come back to them with a clear and very reasonable explanation and they’ll be more willing to agree.

In the instance that it was your mistake, own up to it quickly and send a revised invoice. The aim is to not burn any bridges here!

5. Work towards a resolution

Whether it was your fault or the client’s fault or just a misunderstanding, it doesn’t really matter. At the end of the day, you both want to come to an agreement that satisfies you both. Keep this in mind when handling an unpaid invoice or payment dispute and always communicate via email so you have a record of what’s been said.

6. Seek the support of an accountant

If you’re really struggling with unpaid invoices and managing your accounts receivables, we can help you build a consistent cash flow. From putting the necessary software in place to chasing payments for you, they can guarantee that you get paid what you are owed on time AND without damaging any client relationships.

If you would like help with the matters raised in this article please call us on 020 3915 8585 or email us.