The key to success
6. The key to successful collections of disputed invoices
Your customers play a big role in the dispute management process. But there are two main factors you can control in collecting disputed invoices: speed and collaboration.
- Every disputed invoice is virtually an outstanding invoice, which you cannot really collect until the dispute is settled. The quicker you can give priority to resolving the dispute, the quicker you can collect the invoice.
- Disputes may arise during the invoicing process, but their root causes may lie in all kinds of internal procedures: from procurement all the way to sales. To achieve satisfactory resolutions, various departments in your organisation need to work together in an orchestrated effort.
Speed has to do with the time, and collaboration has to do with the resources you have. It is ideal, and a luxury, to have both. Because invoices in the textile sector are disputed so often that they can put your time and resources under constraint constantly.
You will need to work out the equation of having limited resources and resolving disputed invoices. Leveraging strategic partners in debt collections and their networks is one viable option you can rely on.
Would they harm your relationships with your customers? On the contrary, the professionalism and expertise that a strategic partner brings to the table can help maintain your trade relationships. Especially with a strategic partner with a global network, they have local specialists who speak your customers' languages quickly resolve the disputes where your customers are based.
Could they really resolve disputes? Disputed invoices are prevalent not only in the textile sector but also in most export trades. If a strategic partner specialises in collecting international accounts receivable, they have their fair share of resolving disputes and have developed comprehensive approaches to them. They will work with you in tandem, making sure that every collections activity is up to date with the dispute resolution progress in order to maximise all available collections opportunities.
Would they incur more costs than the disputed invoices' value? A strategic partner specialising in trade receivables collections can advise you when it is most cost-effective for them to step in. Once they are involved, they can help you manage the whole dispute handling process, collections process, plus litigation if necessary. You save time and can focus on other less pressing receivables. They save time by resolving disputes quickly with their experience and expertise. This is likely to offset the incurred costs.
Whether you would work with a strategic partner, the five guidelines above should give you a good start in handling disputed invoices. If done well, settling disputes helps with non-payment risk mitigation, which in turn strengthens your balance sheet and improves your organisation's margin.