Talking about money is never easy, especially when you’re a small business owner. But, unfortunately, there’s no avoiding it! There will come a time when you get a client or two who disputes an invoice, and you will have to manage it in a way that doesn’t damage your relationship.
You have to implement effective credit control procedures if you want to prevent payment disputes (and know how to resolve them if they do come about). Here are six ways to manage invoicing and payment disputes easily and effectively.
- Be organised
You don’t want to waste more time than you need to resolve payment disputes, so keep good records and be organised. You want to be able to find your agreed deliverables and any information you need on billable costs as quickly as possible.
- Always agree on cost first
Before you complete a job or send an invoice, you must set expectations with your client. Talk to them about the service you will provide and by when and how much it will cost.
Agreeing on the billable cost before undertaking the work is essential to minimising payment disputes. If you can follow up the discussion with a quote and have them agree to the proposal, even better! You’ll be able to refer back to this if you have any issues in the future.
- State your invoicing terms as clear as possible
To ensure that your clients pay efficiently (and to nurture a consistent cash flow for your business), create a payment policy and make it clear. Your clients need to know how to make the payment, your payment terms, and when they have to pay it. They’ll also need to be aware of the consequences of missing deadlines.
- Be friendly (but stick to your guns)
The worst thing you can do in a dispute is to immediately cave to what they want or respond very emotionally. To avoid getting angry or frustrated with the client, make sure you have all of the documents and figures you need to justify your point. Then, you can come back to them with a clear and very reasonable explanation, and they’ll be more willing to agree.
Own up to it quickly if it was your mistake and send a revised invoice. The aim is not to burn any bridges here!
- Work towards a resolution
Whether it was your fault, the client’s fault, or just a misunderstanding, it doesn’t matter. You both want to come to an agreement that satisfies you both. Keep this in mind when handling an unpaid invoice or payment dispute, and always communicate via email, so you have a record of what’s been said.
- Seek the support of an accountant
If you’re struggling with unpaid invoices and managing your accounts receivables, an accountant can help you build a consistent cash flow. From putting the necessary software in place to chasing payments for you, they can guarantee that you get paid what you are owed on time AND without damaging any client relationships.
