5 Smart Steps to Avoid Invoice Disputes with Your Clients

5 Smart Steps to Avoid Invoice Disputes with Your Clients

Dealing with invoice disputes can be very time-consuming and frustrating, both for you and your customers. If you are not able to handle these disagreements properly, you might end up losing the client and putting your cash flow at risk.

Fortunately, there are many things you can do to avoid invoice disputes and create a more efficient billing process. Here are five smart steps that can help get you started:

1. Review your invoice template

The first step to avoiding billing issues is to make sure your invoice is clear, accurate, and easy to understand. If your clients are do not understand exactly what it is that they are paying for, they will be frustrated and contact you with a lot of questions. This will cause delays in payment and possibly erode the trust clients have in your business.

So, take the time to review your invoice template and revise any sections that might cause confusion. Make sure the following items/characteristics are present in your invoice format:

  • Breakdown of costs / charges – this should be itemised so customers know what they are paying for. Do not use internal codes or designations that your customer will not understand.
  • Invoice reference number – this is especially important if you are sending the multiple invoices over a period of time. This will make it easier for you and the client to keep track of the billing process.
  • Payment due date – this should be clearly visible on the invoice, preferably in a large font.
  • Company logo and contact details – this should also feature prominently on the invoice, so clients know who is sending the bill. Use big bold letters for the contact details so they are easy to locate. Also, be sure to include the name and number of the correct contact person.
  • Terms and conditions – this should clearly state what the consequences are for late payment or non-payment and what the client can do if they have questions or clarifications about the invoice.
  • Payment information – this should outline all the ways clients can pay you. Include your bank details, links to online payment portals, and other such important information.

2. Include vital clauses in your Terms and Conditions

Update your Terms and Conditions to include two vital clauses: a time limit clause for resolving disputes and a debt recovery clause.

The time limit clause determines when a client can raise a question or dispute about the invoice. Ideally, this should be within the first week after the client receives the invoice. This way, you will have enough time to correct any mistakes on the invoice and settle any issues the customer may have about the charges. This will also help to protect your business from clients who use invoice disputes as an excuse to delay payment.

The debt recovery clause will allow you to add on and recover all costs in the event that the unpaid invoice is escalated to debt collection or legal action. This way, you will not have to pay out of pocket for debt recovery fees as these will be charged to the debtor’s account.

3. Stick to the original agreed upon amount

Many invoice disputes stem from charges or fees that were not included in the initial agreement with the client. So, before you place any additional costs on the invoice, make sure you discuss it with the client first. If possible, get an agreement or acknowledgement of the amount change in writing. This way, the invoice will be clear to all parties involved and you can avoid any conflict.

4. Make a quick courtesy call

Consider making a courtesy call to your client before you send the invoice. This will not only allow you to make sure you are addressing the bill to the right person, but also help remind the client about their unpaid accounts. It’s also a good idea to give your client a quick call after you send the invoice. This way, you can confirm that they actually received it and avoid any issues that can delay the payment process.

5. Establish good credit control procedures

Good credit control procedures will allow you to vet potential customers and limit your exposure to invoice disputes, late payments, and bad debt. Take some time to review your existing credit control process so you can identify the areas that need to be improved. Then, look for ways to update these procedures and make sure they work for your company. You can follow these simple tips we outlined on how to create strong credit control measures.

When to Call a Debt Collection Agency

If you followed all the steps outlined above and you are still left with many unpaid invoices, then it’s time to contact a debt collection agency. Hiring professional debt collectors increases your chances of successful debt recovery. Plus, it allows you to save valuable time and energy so you can focus on other important business matters.

Call Slater Byrne Recoveries today on 0800 445 870 for a free consultation. You can also get more information about our services by visiting this page.

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