How to Stop Disputes from Draining your Cash Flow

George Green

Invoice disputes wreak havoc on your bottom line. Here's how you can fix them to keep your cash flowing.

 

How are disputes impacting your business?

A 2021 Atradius report found that late payments affected 47% of all American B2B credit sales. And disputes were identified as a key contributing factor.

There’s no doubt that they can have a significant impact on a company’s cash flow. When improperly managed, firms encounter bad debts, customer satisfaction issues and problems with future sales. 

WHAT ARE INVOICE DISPUTES?

A dispute can be defined as any issue that will prevent payment of all or part of a bill. They happen at the time of invoicing, prior to any payment being made.

No matter how good a company is or how many satisfied customers it has, there is always the potential for disputes. Effective practices and high standards of service can minimize this risk, but there may still be occasions when the company and its customers reach an impasse.

Here are seven of the most common reasons:

PRICING

A difference in pricing between the agreed amount and the final charge. 

QUALITY

The product or service billed on an invoice is in question, or the product has been damaged in shipping.

ADMINISTRATIVE

Documents are missing or incorrect.

PAYMENT TERMS

Other pricing terms such as due dates or a partial payment plan may be in dispute.

MISSING OR UNACCOUNTED GOODS

Items that have not been received or accounted for — but remain on the invoice.

DOUBLE BILLING

A delivery is billed twice by mistake.

RETURNS OR CHANGE ORDERS

The latest invoice doesn’t reflect a change in order or account for product returns.

 

Every time an invoice is in dispute, it puts the payment at risk and poses a threat to cash flow. On top of this, resolution costs businesses time, money and resources (AR, legal and procurement team members are involved) to sort through the issue and come to terms with the customer.

 

Want to learn dispute-solving strategies from a finance expert? Watch our 20-minute masterclass How to Make Invoice Disputes Vanish.

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HOW ARE DISPUTES RESOLVED?

The standard steps in the resolution process are:

The standard steps in the resolution process

 

This process is time-consuming and costly. Multiple departments are involved, hunting down, inputting and exchanging information. This means they’re taken away from their priority tasks which are often revenue-generating ones, such as collections.

Departments are also often guilty of working in silos. Why? Because teams use different tools to manage data. Finance relies on ERP systems, while others are dependent on the company’s CRM. This means information has to be passed back and forth manually, which is not only inefficient but also prone to errors. With nobody taking advantage of real-time data, it’s difficult to quickly identify the root causes of disputes. This creates delays which can eventually lead to write-offs and revenue leakage. 

 

DID YOU KNOW

6% of all US invoices were written
off as uncollectable in 2021!
Atradius, Payment Practices Barometer USMCA 2021

 

YAYPAY KEEPS YOUR CASH FLOW ON TRACK

YayPay Advanced Disputes helps you optimize your dispute management strategy to boost your bottom line. This is achieved through four key features:

  • Powerful root cause analysis: Line item disputes are captured on a user-friendly, centralized dashboard that can be accessed across the business. This eliminates data exchange and increases granularity in dispute reporting, providing improved insight.

  • Flexible functionality: An unlimited number of supporting files can be attached to any dispute and made available to the end user. This gives team members immediate access to all necessary supporting documentation.

  • Customizable escalation options: Escalation triggers can be automated depending on your business’ SLAs. These can be tailored in multiple ways, for example how many days a dispute remains open until it’s flagged directly to management.

  • Dedicated workspace: All open disputes can be viewed in a single window, allowing the resolver to action items in bulk. This leads to quick resolution directly from the workspace, without having to click into the customer record each time.

 

Cory Merrill, Manager of Financial operations at CHG Healthcare, explains the impact of these capabilities:

“In a cash flow-crucial business, it’s so important to have the ability to quickly organize, follow up and identify root cause of disputed balances. Increased customization, activity tracking and having all the needed data on one page have been major crowd pleasers for our team.”

WHAT’S NEXT?

If you’re interested in learning practical tips and tricks that will improve your dispute management, watch our on-demand masterclass — How to Make Invoice Disputes Vanish.

Or, if you’re ready to see YayPay Advanced Disputes in action and learn exactly how it can benefit your business, contact us below.