When it comes to managing your business, very few things are more critical than preventing invoice disputes. All it takes is one dispute to delay the payment of the entire account. Now, it’s obvious why this can be problematic as it can adversely affect your business’s cash flow.
While all businesses need to avoid invoice disputes, it’s especially true for small businesses that have a lot less wiggle room when it comes to their finances. This is evident in the abundance of services that provide accounts receivable financing for small businesses.
So how do you go about avoiding invoice disputes? If you want to know the answer to this question, then we’ve got just the thing for you. Here are a few valuable tips that will help prevent invoice disputes from delaying payments!
Tip #1: Send Invoices as Soon as Possible
The act of sending invoices early won’t directly reduce the number of potential disputes that may be on the horizon. However, what it does do is it gives you more time to settle the disputes and avoid, or at the very least minimize, a delay in payment.
So how soon should you send the invoice? For the best results, be sure to send out the invoice as soon as the delivery is made. While some businesses opt to do this at the end of every month, this could mean that disputes are left unaddressed until it is long past the due date.
Tip #2: Be Clear and Concise with Your Invoices
In relation to sending invoices on time, you should also make sure that your invoices are concise and easy to understand. Remember that the terminology you use within your business may not be as easy to understand for your customers or suppliers.
As a best practice, make sure that all product descriptions are stated plainly and clearly. This way, the invoice addressees will be able to spot any discrepancies immediately!
Tip #3: Send Out Customer Statements
It happens rarely, but sometimes things can go wrong once an invoice is sent out. If it never reaches its intended destination, this could cause potential disputes down the line. This is why you’ll want to send out customer statements as well. This will help the parties involved reconcile any missing or lost invoices.
Tip #4: Ensure That Relevant Departments Are Informed of Disputes
Lastly, it’s important to make sure that the relevant departments within your business are informed once a dispute does come up. The truth is that invoice disputes can’t be completely avoided. What you can do is make sure that the disputes are addressed swiftly so that payment is not delayed.
Now, this shouldn’t be too much of a problem if the issue lies within the accounting department. After all, the individuals handling accounts receivable should be able to solve disputes rather quickly. This gets tricky if the disagreement is product- or service-related because this will need to be redirected to the correct department. This responsibility lies in the hands of the accounts receivable team as they need to get to the root of the problem and contact the person responsible within the relevant department.
Hopefully, this information will help prevent avoidable invoice disputes in your business. Considering how vital invoices are, especially for small businesses, it’s best to make sure that everything is on point to prevent delayed payments. Luckily, it isn’t that difficult—all it takes is a bit of preparation and attention to detail.
Sometimes, invoice disputes are inevitable. In these cases, there’s no quantifying how important accounts receivable financing is for small businesses. If this is something that you need help with, worry not, as Porter Capital has got your back. For more information on how you can manage your cash flow with Porter Capital’s financing solutions, apply now!