How to Resolve Invoice Payment Disputes As a business owner, managing your debtors and improving your cash flow are crucial to the success of your business. . Therefore, you must take proactive steps to avoid customer payment disputes and prevent cash-flow issues. This article explains how to avoid or resolve invoice payment disputes.
Draft Effective Business Terms and ConditionsA customer enters a binding contract each time they buy from you. A written contract setting out the terms of that transaction provides clarity and can reduce the risk of invoice payment disputes arising. Here are four top tips for writing your business terms and conditions:
Your business terms and conditions are essential in managing your debtors. Therefore, you (or your lawyer) should draft these terms specifically for your business. They will form the foundation for any future debt recovery proceedings. It is far easier to point to terms and conditions in an agreement than to rely on a verbal agreement or informal email chain. Avoid Delays and Always Follow UpIssue invoices promptly while the transaction remains fresh in your customer’s mind. The invoice should contain sufficient detail about the goods or services you have provided to avoid confusion. Once an invoice becomes due, be sure to follow up. You may only need to give customers a friendly reminder by email or phone. Additionally, diarising when accounts become due or implementing an automatic notification system into your accounting software are great ways to keep on top of debtors. Keep CommunicatingKeeping the lines of communication open with a customer who owes you money is essential. If those lines of communication close, it is unlikely that you will receive payment without escalating the matter further. Some tips for keeping communication open:
However, even after doing everything in your power to coerce payment, escalating your debt recovery to a lawyer may be your best option. In this case, issuing a letter of demand is the next step. Key TakeawaysResolving invoice payment disputes quickly can improve your business’s cash flow by ensuring you receive money owed in time to pay your debts. You can increase the odds of customers paying on time by having well-drafted terms and conditions, following up promptly and keeping communication open.
Meryem Aydogan
|