Invoice disputes, no matter what the cause, are a major reason for delayed payment of invoices and a potential source of conflict with customers if they are not handled correctly. Virtually every industry has invoice disputes of one form or another. Invoice disputes can arise from common industry-wide problems or special circumstances unique to a particular business segment.
Agricultural invoice disputes can be a major business problem for farmers who are often strapped for cash and cannot afford to have invoice payments delayed. Farmers have enough to worry about with the variability of the weather and agricultural commodity prices. They don’t want to have to deal with the often time consuming process required to resolve invoice disputes. So what can farmers do?
The best approach to dealing with invoice disputes is to avoid them in the first place, but when they do occur have an early warning system to identify them and a set procedure for resolving them.
AVOIDING INVOICE DISPUTES
The old adage that “An ounce of prevention is worth a pound of cure” rings true when it comes to invoice disputes.
Generally speaking, disputes arise from either billing issues or non-billing issues. Both potential sources of disputes can be avoided by thoroughly understanding the customer’s requirements in both areas, and making sure that they are satisfied. The sources for this information may be available from a number of sources including:
- The customer’s purchase order, particularly the detailed terms which may be listed on the back side of the document or be attached as an addendum.
- The customer’s “routing guide” or similarly named document which spells out the customer’s requirements for paperwork, packaging, shipping, labeling and other details.
- The customer’s purchasing agent
Getting comfortable with the customer’s requirements before shipping the first order will go a long way in avoiding invoice disputes in the first place.
MANAGING INVOICE DISPUTES
The best way to prepare for dealing with an invoice dispute is to have an early warning system to identify the reason for the customer’s non-payment of an invoice. This sounds simpler than it often is. The process is akin to peeling an onion. You may have to peel back several layers to find the source of the problem, i.e. you may have to call several people within the customer’s organization to get the right answer as to what is causing the delay.
Having an accounts receivable software that can help flag these issues and following up to make sure they don’t happen again will save time and help to improve cash flow.
The process or procedure for determining the reason for non-payment (peeling the onion) needs to be mapped out so that contacts with the customer are focused to find the source of the problem, and minimize potential opportunities for friction. An accounts receivable software package with capability to facilitate communication internally and externally can help to accomplish this.
Avoidance of invoice disputes is key to managing accounts receivable and cash flow, but when they do occur, the right accounts receivable software package can help to facilitate early detection and resolution of disputes.