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You’ve finished the job, sent your invoice, and are waiting for payment.
Instead of payment, you receive an email from the customer disputing the invoice. The customer might claim the work was incomplete, the price was unexpected, a service was missing, or simply express dissatisfaction. They arise soon after completion, or they start only when you chase an overdue invoice, sometimes weeks or months later. So where does that leave you?
A disputed invoice is not a lost cause. You need to switch up your approach and do not assume the debt will go unpaid.
Start Establishing Exactly What Is Being Disputed
Clarify exactly what the customer is challenging.
Is it:
- The amount charged?
- The quality of the goods or services?
- Whether the work was completed?
- The quantity supplied?
- Additional work that they say wasn’t authorised?
- The agreed payment terms?
- Part of the invoice rather than the whole amount?
Pinpointing the dispute is crucial.
If a £10,000 invoice is disputed because the customer challenges one £500 item, for example, it doesn’t necessarily mean the remaining £9,500 should be left unpaid while the disagreement continues. A clear understanding gives you a stronger position for negotiation or collections.
Look Back at the Evidence
Once you understand the dispute, review your records in detail. Ideally, you should be able to build a clear picture of what was agreed and what subsequently happened.
Useful evidence might include:
- A signed contract
- Your terms and conditions
- Quotations
- Purchase orders
- The original invoice
- Delivery notes
- Timesheets
- Completion or sign-off documents
- Emails and messages
- Records of telephone conversations
- Evidence that the customer used or accepted the goods or services
- Previous payments relating to the same contract
Remember, you may still have a case without a signed contract. Business relationships aren’t always documented in one neat piece of paperwork.
Emails, quotations, purchase orders, delivery records, and subsequent correspondence may all help demonstrate what the parties agreed. Solid records help resolve disputes quickly.
When Was the Dispute First Raised?
Timing matters.
Imagine that you completed a project three months ago. The customer accepted the work and raised no concerns. You issued your invoice and subsequently sent payment reminders. Only after the third reminder does the customer suddenly claim that the work was unsatisfactory. This does not mean their complaint is invalid, but it should prompt key questions.
Why wasn’t the problem mentioned earlier?
Was the customer given an opportunity to raise concerns when the work was completed? Did they previously acknowledge that payment was due?
Have they promised to pay? Is there correspondence showing that they were satisfied with the work?
Keep correspondence and evidence. Do not rely on memory alone. A simple timeline can help you present a clear case and speed resolution.
Remember, you may not be able to automatically charge interest on a disputed invoice. For a legitimately disputed invoice, the Office of the Small Business Commissioner says you usually can’t claim statutory interest and compensation.
Is It a Genuine Dispute or a Reason for Delaying Payment?
This is often the hardest part. A customer may genuinely believe the work doesn’t meet the agreed specification or that they were overcharged. Genuine disagreements should be addressed properly. However, businesses also encounter situations where objections appear to be used to delay payment.
Warning signs might include:
- The reason for non-payment repeatedly changing
- A complaint appearing only after several payment reminders
- The debtor refusing to explain exactly what is disputed
- The debtor acknowledging the invoice and subsequently changing their position
- A minor issue being used as justification for withholding the entire payment
- Promises to pay being made before a dispute is suddenly raised
Stay professional; don’t let emotions take over. Stick to the facts in every communication. Ask your customer for a clear explanation of the dispute and evidence to support their claims. Then respond clearly only to the points they raised.
Have a Clear Agreed Strategy That Does Not Let the Dispute Drift
Disputed invoices can sit unresolved for months, draining cash flow. Different departments all believe someone else is handling it; meanwhile, no one moves the matter toward a conclusion.
Set a clear process for handling the dispute. Confirm the customer’s concerns in writing. Respond to them. Provide supporting evidence where appropriate.
Set a reasonable response timescale. Decide what happens if you can’t reach an agreement. Don’t let an invoice stay “in dispute” forever. Push for resolution.
Consider Your Negotiation Options
Try to find a commercial solution rather than letting it become a legal dispute.
For example, the parties might agree to deduct a small amount from the invoice to reflect a genuine issue and pay the remainder immediately. In another situation, additional work might resolve the customer’s concern.
Or the evidence may simply demonstrate that the invoice is correct and should be paid in full.
Focusing on the best commercial outcome, not just “winning” the argument, can save time. However, do not automatically accept a large reduction just because the customer refuses to pay. Skilled negotiation often leads to better outcomes for both sides.
Can a Debt Recovery Company Help with a Disputed Invoice?
Yes, depending on the circumstances. Debt recovery isn’t limited to sending reminders.
At My Debt Recovery, our team specialises in debt collection, credit control, and resolving disputed invoices for businesses like yours. We know resolving disputed debts requires a different approach. Our team combines debt recovery and negotiation skills to help your business reach a solution.
When we receive a disputed matter, we first need to understand the background, and we can work together to find out.
What was agreed? What work was completed? What evidence is available?
What has the debtor said? Has the position changed over time? What outcome are you looking for?
We focus on professional negotiation and practical solutions, aiming to recover what you are owed as quickly as possible. If negotiation fails, we can advise on next steps, including mediation or legal action.
If your process feels lacking, get professional support sooner rather than later, because we are on hand to help you deal with a customer who refuses to pay because the invoice is “in dispute”.