One of the many challenges small business owners face is tactfully, but firmly, securing payment from customers who have disputed an invoice which as a result is well overdue.
These long standing unsettled invoices commonly arise when the customer disputes the amount, or is unhappy with the quality of service/goods, or received the goods late and so refuses to pay.
On countless occasions we have heard of business owners at a loss with how to recoup one particular, often substantial, invoice. In our experience approximately 1 in 10 invoices fall into this category as a result of a dispute of one kind or another.
When this happens, it is tempting to ignore these invoice headaches (effectively writing them off) in order to avoid customer conflict and hopefully contain the problem so that it doesn’t affect future prompt payment for other invoices. This may seem reasonable, but it is a credit control trap that should be avoided.
By letting these invoices linger all that happens is that it deepens the customers’ unwillingness to settle the bill. Instead, what we advise is acting decisively on these handful of more contentious invoice cases by attempting to reach an amicable payment agreement with the customer as quickly as possible.
So, if securing full payment is a step too far due to a deep seated dispute, suggesting an immediate 80% payment may spur the customer on to finally resolving this invoice. After all, this is more productive than calling this customer 20 times and getting no nearer to receiving any payment whatsoever, whilst damaging customer relations.
By displaying this willingness to compromise it will also have the positive impact of boosting customer loyalty and adding a tougher approach to your credit control processes.
Remember, the main aim is to receive at least some payment for these disputed invoices – as the reality is that sometimes full payment just may be out of reach. And by applying this invoice management technique it will help to improve payment levels for these type of pesky invoices and free up more time and resource.
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