View All | August 2023 Newsletter Edition


Just about every business has its share of slow-paying customers and plain old bad apples who won’t settle up without making a fuss.

As a result, many companies always seem to be eternally embroiled in lengthy and counterproductive billing disputes. However, your company doesn’t have to fall into this rut. Here are some general principles to consider.

Categorize Your Customers

Review your accounts receivable for signs of collection problems, which generally fall into these basic categories of customers:

  1. Unable to pay. This includes companies that are insolvent, bankrupt or dealing with the death (or otherwise sudden loss) of an owner. Don’t waste a lot of time on these cases. There’s generally nothing you can do except get in line at the courthouse and hope to recover something, or wait until the company recovers from the turmoil created by the death.
  2. Financially strapped but able to pay. This includes companies that could go to a bank and borrow the money. When these people say they can’t pay, what they’re really saying is they decided to pay someone else instead. Well-trained and motivated staff members in your accounting or customer service department should be able to convince these customers to pay your company first.
  3. Refuse to pay. This category includes customers that could pay but won’t because of a billing dispute. A customer might claim you overcharged them for something they bought or mischarged them for something they allegedly didn’t buy. Again, your employees who handle accounts receivable are your first and best line of defense. Train staff to do everything in their power to resolve payment disputes within 48 hours of identifying the problem. Disputes that go beyond this period tend to worsen and might end with you losing the customer or having to take legal action.

Once you have that overall picture, try taking these three steps to get better results from that last category of problematic customers:

  1. Set strict deadlines for resolving billing disputes (again, 48 hours is a standard goal).
  2. Post credits and corrections immediately once a dispute is resolved.
  3. Notify customers that the disputes and errors have been corrected.

Improve Your Processes

Resolving billing disputes promptly gives you a better chance of collecting past due accounts — and keeping customers. Your CPA can help you gather and assess payment and cash flow data to improve collections processes.