Accounts receivable disputes could significantly cause frustration for businesses, impacting the company’s cash flow. Ineffective dispute management in accounts receivables or unresolved disputes could have a negative impact on your company’s bottom line. So, while guaranteeing prompt dispute resolution while keeping a great customer experience may be a delicate balance, doing so is essential in the modern world.

Dispute resolution is the process of settling any disagreements that can arise as a result of inadequate or erroneous billing records and bills.

Customers usually postpone payment when there are several conflicts. Unresolved issues could boost a company’s cash flow and keep it from experiencing a direct financial loss if they are quickly resolved. Therefore, dispute resolution can be defined as the sequence of actions required to settle disputes between parties in

Understanding the different forms of disagreements is necessary before developing ways to settle disputes swiftly and effectively. Here are some of the types of disputes:

Pricing: The pricing discrepancy between the amount charged and the amount that both parties had previously agreed upon gives rise to a dispute.

Administrative: A dispute brought on by erroneous or missing paperwork or legal document.

Quality: A dispute might occur when the quality of the good or service listed on an invoice is in question.

Unaccounted Goods: A dispute that results from the billing of unaccounted-for items or services is known as an unaccounted goods dispute.

Multiple Billing: A dispute develops when a particular order is inadvertently billed twice or more times

Deduction in A/R: The amount the customer does not pay in full for specific goods and services for various reasons, such as damaged items, shipment delays, billing errors, or other reasons, is known as a deduction in A/R.

Analyst spends most of their working day on manual, repetitive tasks that are a part of the inefficient, traditional dispute settlement process. Here are the critical stages in the dispute resolution process:

Receiving Dispute Cases: A disagreement case from the accounts department or a dispute ticket from the client is sent to the analyst.

Tracking And Prioritizing The Cases: The analyst then enters the issue into a tracking system and ranks the instances according to importance using the dispute cause code.

Data Aggregation: The analyst gathers all pertinent data to find the appropriate stakeholders for the invoice. The analyst manually does research and conducts a fundamental analysis of the disagreement after identifying the players. The analyst then obtains all the documentation associated with the invoice, including the Bill of Lading, the Order Invoice, the Sales Invoice, the Tax Receipt, and any other order-related documents.

The request for Data: If some papers are missing, the analyst contacts the client and asks for additional information to facilitate speedy dispute resolution.

Resolution of Disputes: The AR analyst investigates the cause and validity of the dispute after acquiring the required paperwork. After that, the analyst decides how to proceed with the disputed item, such as whether it should be collected, refunded, or written off.

Approval: If the dispute is legitimate, the AR analyst might need permission or approval on mail from superiors to accept it. This necessitates even another set of manual and unnecessary processes, slows the dispute resolution.

Follow-up: If the dispute is unfounded, the analyst informs the customer in writing of this fact and asks for more details or the withdrawal of the pertinent issue. However, if the dispute is legitimate, the analyst interacts with the client and issues a credit or debit memo for the client’s future use.

Syncing Changes With ERP And Trade promotion Systems: The analyst notifies the accounts department of the dispute’s status and requests that they alter the invoice’s status in the ERP. After making the appropriate adjustments, the client’s account status is closed.

Generating reports: Report Generation Based on research, manual reports are produced to assist managers and executives in assessing the effectiveness of deductions. The lack of consolidated real-time data makes reporting generation significantly slower and more prone to mistakes.

Due to the numerous difficulties in the traditional dispute management process, businesses worldwide need more time and money to resolve disagreements. Some of the significant challenges include:

Additional Cost

The AR teams must handle numerous dispute situations, and expediting their resolution occasionally incurs additional expenditures. In addition, writing off unresolved disagreements could result in income leakage, which would be detrimental to the business’s bottom line.

Time-consuming

Analysts spend numerous hours compiling data and supporting documentation to establish the validity of a disagreement. Research has shown that 15–25% of arguments are unsubstantiated, taking up time from other high-value jobs that analysts may perform.

Siloed-operations

Effective dispute resolution calls for the collaboration of multiple departments to determine the legitimacy and origin of a disagreement. AR teams may find collaboration challenging when siloed activities exist, which slows down the dispute-resolution process.

Manual Process

Dispute resolution is a largely manual process due to the limited functionality of older ERPs and the lack of defined procedures. Dispute resolution is largely manual due to tasks including obtaining data from internal and external sources, communicating back and forth with clients about missing papers, and retrieving data from numerous portals.

Lack of visibility & transparency

Lack of real-time data and centralized information results in little to no visibility of the information flow within and outside the firm. This makes it difficult for analysts to understand the disagreements adequately and inhibits them from arriving at

When a customer pays your invoice, whether it was early, on time, or two weeks late, you should send them an email saying, ‘thank you for paying.’

This will surely have a beneficial impact; perhaps due to your courteous handling of the situation, they will try to pay on time in the future. Or they’ll value you acknowledging their intention to make the payment, further strengthening the bond, and ensuring that subsequent payments are made on schedule.

‘Thanks for the payment’ emails can be used to convert clients to direct debit or secure additional sales in addition to helping to improve future payment habits.

Subject: [Your company’s name] <> [invoice reference number] Body:

Hello [Recipient’s first name],

I just wanted to drop you a quick note to let you know that we have received your recent payment in respect of invoice [invoice reference number].

Thank you very much. We really appreciate it.

Best regards,

[Sender’s first name]

The most brilliant move in this situation is to fully automate the dispute management process and improve the dispute resolution portion of an already implemented ERP or receivables management solution. Your business may experience less of the following if dispute management in accounts receivables is automated:

The ultimate organizational aim of better revenue with lowered risk may be accomplished with AR automation and the seamless integration of cloud-based solutions with dispute management in accounts receivables.