Dispute Handling

Genuine vs tactical disputes

Not every dispute is what it appears to be. Some are genuine: the customer has a real concern about what was invoiced, delivered, or completed, and they raise it in good faith. Others are tactical: the customer is using the dispute as a mechanism to delay payment, buy time, or create leverage in a negotiation they should not be having. The distinction matters because the correct response is different in each case.

Genuine disputes tend to share certain characteristics: they are raised promptly after the invoice is issued or the goods are delivered; they identify specific line items, quantities, rates, or quality issues; and the customer remains engaged and willing to provide details. A customer who calls within a week of receiving your invoice to say "line 3 should be $1,200, not $1,800 — here's why" is raising a genuine dispute.

Tactical disputes look different. They tend to emerge after the account has been overdue for some time — often triggered by your first formal collection contact. They are frequently vague: "we're reviewing the invoices" or "we have concerns about the quality of the work." They resist being pinned down to specific amounts or items. The timing is telling: a customer who has received monthly invoices for six months without complaint and then raises "quality concerns" the day after receiving a letter of demand is displaying a pattern that is hard to ignore.

Diagnosing the dispute accurately determines your response — but in either case, the process is the same: document everything, set timelines, and keep the account moving.

Responding to a genuine dispute

When a customer raises what appears to be a genuine dispute, the goal is to resolve it quickly and fairly. Prolonging a legitimate dispute is expensive for both parties and damages the commercial relationship.

Acknowledge the dispute within two business days. A simple written response: "Thank you for raising this. We are reviewing the matter and will respond within five business days." This does two things: it confirms you have received the dispute and will address it, and it establishes a timeline.

Then review your own records. Do you have the delivery documentation, the signed quote or purchase order, the timesheets or material records that support your invoice? If you do, and your invoice is correct, respond with that evidence in writing within the committed timeframe. If your review reveals that the customer has a point — a billing error, a quantity discrepancy, a rate that was not agreed — issue a credit note promptly. Do not drag out an internal decision process. Acknowledging an error and correcting it quickly costs far less than a prolonged dispute, and it usually preserves the relationship.

Collecting the undisputed portion

This principle is important and often overlooked: a dispute over part of an invoice does not freeze the undisputed portion. If a customer disputes $5,000 of a $50,000 invoice, you have $45,000 that is not in dispute. You are entitled to collect it.

State this clearly in your response to the customer: "We acknowledge your query regarding item 4 and will respond separately. The balance of $45,000 remains due and payable under our terms and we request payment of that amount by [due date]." Put this position in your terms of trade as a standard clause — it becomes much harder for a customer to argue against a position that was agreed in writing at the start of the relationship.

A customer who disputes $5,000 and then refuses to pay the undisputed $45,000 has changed the nature of the conversation. That is no longer a dispute — it is a payment refusal, and it should be treated accordingly.

Handling tactical disputes

A tactical dispute requires a different response. The goal is to bring the dispute to a defined resolution quickly, prevent it from drifting indefinitely, and collect what is owed.

Demand specifics. In writing, ask the customer to identify precisely which invoice number, which line item, and what the specific disagreement is. Set a deadline: "Please provide details of your concern by [date]. We will respond within five business days of receipt and expect to resolve this matter within ten business days of your response."

If the customer cannot or will not provide specifics, that itself is informative. A debtor who says they have a dispute but cannot tell you what it is does not have a dispute — they have a reason to delay. Continue your normal collection process. The vague assertion of a dispute is not a legal defence to paying what is owed.

Documentation you need

In any dispute, your ability to defend your position depends almost entirely on the quality of your documentation. The documents that typically matter are: the signed credit application and terms of trade (establishing the contractual relationship); any signed quote, purchase order, or work order (establishing scope and price); delivery receipts, completion sign-offs, or client acceptance emails (establishing that the work was done or goods delivered); any written communication confirming scope changes or variations; your invoice with clear, specific line items; and your own internal records — timesheets, materials lists, photos, job notes.

The absence of any of these — particularly a delivery sign-off or completion acknowledgment — is the most common reason good claims fail in disputes. If you did the work but cannot prove you did it, your invoice becomes harder to defend.

Common dispute-enabling mistakes

Most disputes are enabled by a weakness in the supplier's process rather than by bad faith in the customer. The most common causes are: no clearly defined scope in the contract, so "what was agreed" is genuinely ambiguous; verbal change orders or variations that were never put in writing; no delivery or completion sign-off, so the customer can plausibly deny receipt or acceptance; invoice descriptions that are too vague to identify the specific goods or services; and the first invoice being sent months after the work was done, giving the customer time to forget the details and grounds for disputing them.

Fixing these process gaps — before the next dispute, not after — is the highest-return investment in your credit control programme.

When a dispute reaches external resolution

If direct resolution fails, you may need to refer the matter to an external process: a mercantile agent, a solicitor, or ultimately a court. At that stage, all of your documentation becomes evidence. Organise it early — in the order it arose, with dates — and do not allow email threads to go unarchived. The business that presents to a mediator or tribunal with an organised, complete document trail almost always has a stronger position than one that scrambles to reconstruct events from memory.