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A dispute is often the reason why invoices are not paid. That’s why it is best to find a solution to a dispute as quickly as possible. Invoices that have been open for too long are undesirable for a company for a number of reasons, if only because they provide a higher days sales outstanding (DSO).
Disputes also have repercussions for other aspects of business operations. For example, customer satisfaction can decrease, and teams’ workload increases within the company. A dispute with a particular customer can put all the other payments from that same customer on hold.
It therefore makes sense to deal with disputes in a smarter way, through dispute management. By approaching disputes in an orderly and systematic way, you will increase the probability that outstanding invoices are paid quickly. Dispute management should ideally form part of a sophisticated credit management process.
Let us first describe what we mean by a dispute and dispute management.
What is a dispute?
A dispute, which could also be the result of a misunderstanding, is nothing other than a “problem” that a customer has with your product or service and therefore decides to postpone the payment of an invoice, or even not to pay it at all.
There are vastly different types of dispute, however The most common causes of a dispute are:
- An incorrectly delivered product (e.g. wrong address)
- A product delivered too early or too late
- Products missing in the delivery
- Damaged goods or packaging
- The invoice contains inaccuracies or is not clearly formatted
- Errors regarding the price or a discount
- Errors related to trade promotions or bonus
- The quality of the product or service is not satisfactory
- Product returns
In other words, there are many reasons why a dispute might manifest itself. And it is inevitable that disputes will arise in any business.
What is dispute management?
Dispute management is all about solving and preventing disputes, and in the most efficient way possible. An important aspect of good dispute management is that complaints, disputes and disagreements are dealt with and settled in a timely manner.
Without dispute management, all the relevant information must be gathered from different departments within a company, such as accounting, credit control or sales. It is immediately obvious that this process can be very time-consuming and inefficient.
We discuss how to approach dispute management in the paragraphs that follow.
The dispute management process
1. Register the dispute carefully
It goes without saying that recording the dispute in writing is very important. By registering it, you will eliminate subsequent problems. You should therefore describe the reason and the cause of the dispute very precisely.
Be sure to ask the following questions:
- What exactly does the dispute entail?
- How did the dispute arise?
- Is it a valid complaint?
- Can the complaint be resolved in the short term?
- What is the customer trying to achieve with the complaint?
- Should the customer be compensated as a result of the complaint?
- Does the complaint put pressure on your long-term relationship?
- Is the dispute only about a one-off transaction?
If there is no obvious answer to some questions, and the dispute is still unclear, it is advisable to contact the customer directly. In fact, we recommend doing so anyway. In this way, your customer receives confirmation that the complaint has been well received, has been registered, and that you are working on it as a company. Should this complaint lead to legal proceedings, at least you cannot then be accused of not wanting to reach a solution.
2. Communicate about the dispute
Communication about the dispute is therefore crucial. Both internally with employees – so that everyone is on the same page and a dispute does not “fall between the cracks” – and externally with the customer.
The person who registers the dispute internally is not always the person who will resolve the dispute or the person who communicates about it. With good debtor management software, other employees can be quickly called in to help, or kept informed.
The customer must be informed of the status of the dispute at all times. For example, if the complaint is invalid, this must be communicated to the customer, including the reason. Conversely, in the case of a valid dispute, the credit controller can, for example, adjust the invoice and send a credit note.
3. Analyse the dispute
When all the information about a dispute is known, it is easier to carry out a correct analysis of the problem. Disputes are a form of feedback, and their analysis can provide the impetus to improve internal business processes. In the long run, this can greatly reduce the number of disputes.
The analysis can provide answers to many questions:
- What are the causes of disputes?
- What is the lead time for disputes?
- Where is there room for improvement?
4. Link a workflow to a dispute
Registering disputes makes it much easier to gain insights. And by analysing disputes, certain patterns and groups of disputes emerge. Think of similar disputes, for example from a particular department within the company or about a certain type of dispute such as damaged goods.
It is then recommended to devise a specific workflow for these groups. The goal should always be to make improvements within the organisation or at least have a plan to limit the lead time of disputes.
How can iController help you with dispute management?
Smart software for registering and handling disputes offers an answer to the many challenges. Automatic dispute management is built into the iController platform as standard and is part of a broader workflow within credit management.
For example, invoices can be quickly resent, notes can be made about the dispute, and each case can be communicated or passed on quickly within the organisation. All actions in connection with the invoice or the customer are consistently registered on the customer file and with the relevant invoice. Extensive reports are perfectly possible afterwards.
Customers can report disputes
Dispute management is fully automated within iController. Customers can easily report a dispute themselves when they receive a payment reminder. If debtors receive a reminder by e-mail, they can dispute the invoice by clicking a button.
All disputes in one place
Disputes flagged by customers are automatically registered. In iController, credit controllers can find these registered disputes on the worksheet in so-called tracking lists. These form a daily to-do list for planning specific actions. For example, there is always an overview of new disputes that are still to be accepted, and disputes that are pending.
Incidentally, there is an option in iController to indicate whether disputes fall within procedures or not. Disputes that have been resolved automatically return to the original workflow.
Grouping types of dispute
Different dispute codes can be created in iController, so that similar disputes within the platform are grouped in lists or reports. For example, dispute codes can include one for damaged goods, a code for credit notes, a code for an incorrect price or a code for the wrong product. Users have complete freedom in this.