Frustrated with Clients Disputing Your Invoices? Here’s the Fix

You’ve done the work; poured your heart into it; invoiced the customer—and then… silence. Days and weeks go by, only to find out that your client drops a bombshell on you: the client wants to dispute an invoice.

This is the moment every agency owner dreads. There are many things that go through your head at that moment: did you misquote the project, did you not deliver the services accurately? Or is the client just trying to minimize the costs?

Payment issues with clients are sadly a common issue. Let me show you how you can resolve invoice disputes.

What is a disputed invoice?

A disputed invoice is a commercial bill of exchange that has been challenged or questioned by the recipient (payer) regarding its validity, accuracy, or authenticity.

Customers don’t always dispute the entire invoice. They could dispute just one line item, the due date, or the total amount. In any case, it’s in your interest to resolve the dispute as swiftly as possible.

While some customer disputes might be legitimate due to the business having made an error, sometimes, clients might want to get out of paying for services. In other cases, they might try to force the business to reduce their rates after delivering the service.

The impact of disputed invoices

Disputes are a sad reality of every business. As much as you strive to avoid them, you’ll most likely only be able to reduce the number of disputes. And that alone can save your business because dealing with them takes time away from more important tasks.

The biggest impact of disputed invoices is therefore time lost—and, money wasted. Instead of working on your projects, you have to document one that you thought had ended, only to receive what you’re entitled to—your money.

Another impact is the damaged relationship between your agency and your clients. A client that has raised a dispute might never want to work with you again.

Lastly, there’s a chance of accounting errors that might get you in trouble if your agency gets audited. All in all, it’s in your best interest to have a process for dispute resolution in place, and one for prevention, too.

7 common causes of invoice disputes

If you’re wondering why you’re always chasing overdue payments, and they end up in disputes, let me introduce you to the most common reasons.

1. Overcharging or incorrect billing

   • incorrect quantity of services provided

   • excessive charges for services (e.g., setup fees)

2. Incorrect payment terms

   • failure to specify clear payment terms in the contract or agreement

3. Unapproved expenses or unauthorized charges

   • unrelated third-party payments made on behalf of the client without authorization

4. Changes to scope or specifications

   • alterations to project requirements that affect invoice amounts

5. Delayed delivery or poor quality services

   • failure to meet agreed-upon timelines, leading to rework, delays

6. Error in calculation or invoicing process

   • inaccurate calculations for taxes, discounts, or fees

7. Lack of transparency and clear communication

   • unclear expectations about billing procedures

   • lack of regular updates on the status of outstanding invoices

Handling disputed invoices in 3 steps

When a client doesn’t want to pay an invoice, it’s essential to address the issue as soon as possible to resolve any misunderstandings and avoid potential financial losses. Here’s a three-step invoice dispute management guide you can easily follow.

1) Identify the core issue

The first step in getting a head start on your disputed invoices is to identify the issue.

• Review the invoice details: Review every detail related to services rendered and corresponding payments. Ensure that each charge on the invoice correlates with the services agreed upon as an invoice should reflect exactly what was delivered. Double-check item descriptions, quantities, and rates to avoid discrepancies.

• Communicate with the client: Reach out to the client directly when a dispute arises. Open the dialogue by asking them to explain their perspective on the dispute. This interaction isn’t just about conveying your stance—it’s an opportunity to understand their concerns fully.

• Clarify misunderstandings: Use this opportunity to address any misunderstandings regarding invoice charges, and why the customer disagrees with them. Approaching the issue with clarity and empathy can help defuse tension. Explain charges calmly and show evidence supporting these charges.

• Gather relevant documentation: Collect all documents pertinent to the dispute. This includes signatures, emails, payment receipts, your terms and conditions, and any written approvals. Having a complete record helps justify your position and explains why the invoice stands as is.

Collect signatures to prevent invoice disputes.

Collect signatures

Learn more

If you’re using SPP, you can use the signature field to help you resolve disputed invoices. Every client signature is submitted with an IP address and timestamp in the project details.

2) Resolve billing conflicts

Once you have an overview of the general problem, it’s time to dig deeper into it, gather documents, and find a solution.

• Provide evidence and clarification: Sharing evidence is the first step when responding to a disputed invoice. If you’re using a client portal, everything you need will be in your project. Once you have your documentation, clearly communicate each invoice component to your client. Break down each line item, explaining why it is necessary and how it corresponds to the services provided.

• Negotiate a settlement or adjustment: If after presenting your case, the client still has concerns, it’s time to negotiate. Approach this step with an open mind and willingness to find a middle ground. Discuss potential pricing adjustments and identify any errors that might have occurred. Negotiations may sometimes include offering discounts or a payment plan. Offering a small concession can show goodwill and preserve the client relationship.

• Formalize any resolution agreements: Once you’ve reached an agreement, put it in writing. Document every term or adjustment you both settle on. This prevents similar conflicts from arising in the future. Use a confirmation email or a follow-up document outlining the agreed elements.

3) Prevent client payment issues

If you don’t want to repeat step one and two every month, the best solution is to prevent disputes from arising.

• Charge upfront: Many agencies still use payment terms that allow clients to pay within 30 or 60 days. Use productized services so you can charge upfront and only provide the services if your invoices have been paid.

• Automate invoice reminders: SPP’s system automatically reminds clients of unpaid invoices. This reduces the need for your team to keep track of invoices.

• Check in after projects: Disputes often arise when clients are unhappy. One way to know if they aren’t satisfied is to check in after service delivery.

Your proactive path to invoice disputes

Disputes over invoices don’t have to be deal-breakers. With a clear dispute resolution process and a proactive approach in place, you can easily handle these challenges and keep strong customer relationships.

By mastering the art of dealing with invoice disputes, you’re not just solving a problem—you’re building a reputation as a trustworthy professional who values clear agreements and mutual respect. That’s the kind of reputation that leads to long-term success and peace of mind.