Handling payment disputes with your trading partners

No matter how efficient your A/R and A/P teams are, payment disputes will likely come up from time to time.

As you know, these disputes can be time-consuming, labor-intensive and costly for your teams. What’s more, they can result in damaged business relationships and cash flow problems for CFOs.

Of course, the better trained your staff is to deal with disputes, the less time, effort and money that gets wasted for your company overall.

Here’s a quick and concise training guide you can pass to A/R and A/P to make sure everyone is educated on various types of disputes and how to handle them.

Types of payment disputes

According to the finance experts at YayPay, some of the most common disputes are:

• Pricing dispute: The price that’s charged on the invoice differs from the one that both the vendor and customer agreed on originally.
• Quality dispute: Usually, either the quality of a product/service is under consideration, or product was damaged during shipping.
• Administrative dispute: Here, there may be missing or incorrect documents related to a purchase.
• Payment terms dispute: Besides pricing, the vendor or customer may dispute other terms (e.g., due date, partial payment plan).
• Unreceived purchase dispute: This occurs when a customer is billed for items that are missing, are unaccounted for or haven’t been received.
• Double billing dispute: Here, simply, there’s more than one billing for a specific purchase.
• Return or change order dispute: The customer’s most recent invoice doesn’t indicate a change in order or product returns.

Tip: Have your A/R and A/P managers go over each type of dispute and walk through scenarios on how their team should handle it. By using real-life scenarios, managers can see exactly how their staffers respond – and make sure they do so properly.

Resolving disputes

After going over different types of disputes, A/R and A/P can review these general best practices for dealing with them: 

• Always document. Every time A/R or A/P encounter a payment dispute, they should log it into their system. That way, should the issue escalate, they have a solid documentation trail.
• Prioritize by severity. Chances are, there will be times when multiple disputes are in the works at once. YayPay recommends ranking them in order of importance (perhaps with a code in your system), so the most pressing issues can be tackled first.
• Do extra research before you recommend a solution. Before arriving at an outcome, staffers must ensure they have all the proper details – proof of delivery, order invoice, etc. If necessary, they can track down any missing documents. Then they can recommend a proper outcome (e.g., issuing a refund, suggesting a write-off amount).
• Follow up. Especially if it’s a major dispute, it’s smart for A/R or A/P to follow up with the trading partner afterward. Verify they’re satisfied with the outcome and the issue has been fully resolved. That way, your company won’t get blindsided down the road by a legal claim.