As a company owner, you don’t want to hear negative business news first thing in the morning. However, adding clients adds another layer of complexity, and a single incorrect move might be catastrophic for your business. Dispute invoice is a regular source of stress for small companies even for a successful business.

Customers will dispute a bill at various times regardless of how foolproof your billing procedure is. However, how you respond will significantly impact the reputation you’ve built with your customers. This guide may help you identify the root causes for disputed invoices, implement measures to reduce the frequency with which your company experiences them, and find effective approaches (apart from legal actions) to resolve them.

What is a Disputed Invoice?

The term “disputed invoice” refers to an invoice with which the client has taken issue. For example, a consumer can complain about the service or product’s description, price, invoice total, payment conditions, etc.

This disagreement of invoice dispute must be settled as soon as possible, and much will rely on your connection with the consumer. If there was an honest mistake on your account, it’s simple to have it fixed. One may either reissue the invoice once the mistake has been fixed or utilize debit or credit notes to settle the disagreement of invoice dispute.

However, if you and the client have a dispute or a miscommunication, ironing out the kinks may take some time.

Deliverables, invoice amounts, payment periods, and other conditions may all be contested by the client. There is always a reason behind a customer’s complaint. This is the point of contention, and you’ll want to settle invoice disputes as quickly as possible, or else it will cause unpaid invoices.

We will see some techniques for dispute resolution.

Recent data shows up to 14% of bills are paid late because of disputed invoices or complaints.

What are the Common Causes of Invoice Disputes?

What are the Common Causes of Invoice Disputes

Customer disputes when they believe the amount billed is incorrect or they should not be held responsible for the purchase. In other words, if there are problems with a client’s bill, it will lead to a disputed invoice.

Reasons for a disputed invoice range from consumers’ inability to pay to accounting mistakes and incorrect pricing.

1. Customer Dissatisfaction

The client would likely complain that you did a poor job in this instance. Of course, they may be right; if that happens, you could always redo the task.

If redoing the work isn’t possible, you may at least check the contract to ensure you’re getting what you were promised; it’s possible that you weren’t at fault and that the client just gave you inaccurate requirements.

However, you may want to be wary if they started making claims after you sought your money back. You should be prepared for a lengthy recovery procedure in case of many invoice disputes.

2. Invoice Processing Errors

There is a world of difference between “1” and “100,” even if all that separates them is a few zeroes. If the client notices that you gave them an incorrect amount to work with during invoice processing, they will likely file an invoice dispute due to minor accounting errors in your accounting system.

When invoice disputes happen, you should always review your invoices for accuracy before delivering them to customers. This will help in avoiding disputed invoices and building better customer relationships.

3. Faulty Goods

The customer may claim that the provided items are defective or damaged and, as a result, unusable. You should verify the integrity of their allegation; if the items are defective, you should reissue them; otherwise, you’ll need to come up with another solution to the problem of invoice dispute.

4. Pricing Disagreements

Get the customer’s approval for the full cost before beginning work on their request. In this manner, everyone could operate from the same playbook. Even if you’ve previously sent over your business bundles and pricing sheet, double-checking the client’s order before fulfilling it is always a good idea.

The scope, cost, and schedule of the project, as well as the overall price, should all be specified in detail on the rate sheet. Otherwise, there will be a chance of an invoice dispute and the client may follow invoice dispute laws.

5. Payment Constraints

If your client is short on funds, they may challenge your entire invoice to get more time to make payment. Many businesses may charge a late fee if you pay them in this sneaky way(as you are hurting their credit management.)

Businesses of any size may prevent this dishonesty by charging a commitment charge to new clients before beginning service. This affects customer relationships.

Types of Invoice Disputes

Disputed invoices may be broken down into many categories, each of which may call for a unique approach to resolution. For example, the sales team should be contacted in the event of a disagreement over an invoice dispute (due to poor writing, a pricing mistake, etc.).

Likewise, the technician or the sales manager, or the service provider will settle disagreements over technical matters. Let’s look at the common invoice disputes.

Here are common types of invoice disputes:

  • Disputed invoice related to Quality
  • Administrative disputed invoice
  • Duplicate invoice disputes
  • Price disputed invoice (Also includes payment dispute)
  • Partial Dispute Amount
  • Credit not processed
  • Event date disputes
  • Missing goods invoice dispute
  • Partial Dispute Percentage

How to Deal with a Disputed Invoice?

In every company, disputed invoices are prevalent. Some tried, and true approaches to invoicing disputes are outlined below to solve disputes (with supporting documents). Otherwise, clients can take legal action.

1. Always have the Practice of Sending Estimates and Quotes

Clear price conditions may be reached between buyers and sellers by adhering to the practice of delivering quotes before the actual transaction. It aids in lowering the potential for an invoice dispute.

2. Set Your Terms and Conditions Very Clearly

Each invoice has to state the sale and payment conditions clearly. In addition, providing reminders on the payment due date may help payments be made on time. However, there may be arguments if the payment conditions aren’t clear especially for the late payment and time limit.

But when you are clear about terms and conditions it is less likely to have an invoice dispute.

Add Payment Terms & Conditions to Invoices

Make your invoice look more legitimate and professional by adding terms and conditions at the bottom of the invoice template.

Send Accurate Invoices!

3. Incorporate Online Accounting Software in Business

Invoice amounts are computed and sent to the client without any manual intervention from the program. When a purchase order and invoice are created and managed using software, fewer mistakes are made in the books. So, it’s beneficial for a company to invest in quality invoicing software to streamline the billing process.

Creating invoices is a breeze with cloud-based invoicing tools like Moon Invoice. However, using electronic invoicing has several advantages when it comes to an invoice dispute.

  • Make an impact on your clients or consumers.
  • Create timely invoices and other papers from any location.
  • Guaranteed secure access to your invoices

4. Maintaining Proper Records

Having accurate documents to go back to when disputes arise is crucial. A record will help to solve an invoice dispute as you can show clear records to the parties involved. It may act as legal documents.

5. Build Trust Among Your Clients

It’s best for everyone involved if they can keep their cool throughout any discussions about the conflict over dispute invoices. Then, if you make a mistake, admit it and make amends to restore confidence.

As a business owner, building trust with the client is important in billing disputes.

Example of Invoice Dispute Letter

Invoice Dispute Letter

Subject Line: Regarding Invoice [number] sent to you on [date]

Dear [Name of Client or Client’s Firm]

We are writing to inform you that the invoice you submitted on [due date] contains a mistake. I have attached the invoice with the disputed items circled.

The sum is inaccurate because [explain why]. Therefore, this sum has to be adjusted in the following manner [explain in detail].
Please fix this oversight so that I may submit this invoice for payment.

In this package, you will receive duplicates of the contract’s supporting documentation, including the sales slips and delivery notes.
We ask that you look into the situation so that we may provide a revised invoice as soon as feasible.


[your name or business’s name]

How Long Do You Have to Dispute an Invoice?

Depending on the connection between the two parties, there may be different deadlines for disputing an invoice. There is no standard invoice dispute management system. Examine the governing contracts once again to see how the parties do business. Standard wording in contracts about invoice disputes often explains how to challenge an invoice and how long a dispute might extend.

Include language on resolving invoice disputes if they are missing from your present contracts or terms and conditions. For example, managing a dispute an invoice may be done on your terms if you have processes for handling such situations written into your terms and conditions before any problems occur.


Accounts payable management includes settling disputed invoices. It’s tempting to disregard disputed bills out of fear of alienating a client, despite the difficulties of dealing with late payments. Could you resist the urge to give in to it?

Not every client will be lost due to an unpaid invoice. How you handle the follow-up might be an excellent chance to solidify your connection with the consumer.

Consider all five of the alternatives above when an invoice dispute develops. Then, take the initiative to settle any disputed invoices since doing so will benefit your company and the relationship with the consumer.


Jayanti Katariya
Jayanti Katariya About the author

Jayanti Katariya is the founder & CEO of Moon Invoice, with over a decade of experience in developing SaaS products and the fintech industry. He holds a degree in engineering. Since 2011, Jayanti's expertise has helped thousands of businesses, from small startups to large enterprises, streamline invoicing, estimation, and accounting operations. His vision is to deliver top-tier financial solutions globally, ensuring efficient financial management for all business owners.