| Author |
Topic: Collecting Disputed Balances |
Michael Dennis
Moderator
Member # 109
Member Rated:
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 posted October 08, 2003 11:29 AM      
One of the attendees at a recent deduction management web based seminar [Webinar] asked this question: You mentioned that customers should not be allowed to withhold payment on a large dollar invoice pending issuance by us of a small dollar credit memo. How do we prevent customers from taking this action unilaterally?
Answer: There is no way to prevent deductions. As I mentioned in the Webinar, deductions are inevitable and are one of the many costs associated with doing business on open account terms with customers.
I suggested this approach: Agree with the customer that no creditor should ask you to pay an amount in dispute...but that it seems equally obvious that customers should not hang onto payment for large invoices pending receipt of small dollar credits. Following this commentary / explanation ask your customer to issue payment for the dollar amount that is NOT in dispute.
Comments?
Michael Dennis
Webinar Instructor
[ October 08, 2003, 07:09 PM: Message edited by: Michael Dennis ]
Posts: 434 | From: 8 Whatney, Irvine CA 92618 | Registered: Oct 2001 | IP: Logged |  | |
S.Petry
Member
Member # 347
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 posted October 08, 2003 12:16 PM
Whenever a customer is holding payment in lieu of credits I always suggest they pay the undisputed balance because credit memos aren't always issued promptly. I will sometimes explain to the customer (if appropriate) that it is in their best interest to pay the undisputed balance as they don't want to show a past due balance or create a past due payment history. I think it is better to show a disputed balance on their account rather than a large unpaid invoice.
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Suzanne @CTP
Posts: 31 | From: Huntington Beach, CA | Registered: Apr 2003 | IP: Logged | | |
Jocelyn C
Member
Member # 309
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posted October 08, 2003 01:55 PM
Suzanne & Michael, I agree with your comments.
I also request payment of the non-disputed amount. It makes no sense to withhold payment on the whole invoice. There have been many occasions where the client is deducting or witholding payment for defective goods or items they didn't like, yet they haven't returned them for credit or even contacted us to advise us of a dispute.
If the items have been return or "the ball is in our court", we do what we can to expedite the credit to clear up our accounts.
Jocelyn
[ October 08, 2003, 01:58 PM: Message edited by: Jocelyn C ]
Posts: 44 | From: Southern CA | Registered: Feb 2003 | IP: Logged | | |
susan
Member
Member # 245
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posted October 09, 2003 07:15 AM
I shared some common views with some of you too. We will usually also ask our Customers to issue payment on the undisputed balance as many of them are using disputes with very small amount as an excuse to pay late or trying to buy more time. Such delay will only cause a higher possibility of collection risks as the older the debt the more difficult to collect. I've Customers who hold $200.00 for $30,000.00 which is really ridiculous. In some instances should the Customer persistently refuse to co-operate on clearing the payment on even undisputed amount, we would just have to Credit Hold them, or get the Sales involve in the settlement before next Credit releases.
Susan
![[Razz]](tongue.gif)
Posts: 30 | From: SINGAPORE | Registered: Sep 2002 | IP: Logged | | |
Jerry @ Marshall
Member
Member # 28
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posted October 09, 2003 01:28 PM
And extreme cases, there may not BE a next credit release. What we're dealing with here are customers who abuse the trade credit system. After all, we extend "short term" credit, we do not charge interes, we do not charge late fees, and we ship when they need the product. I have no qualms about explaining this to those customers, and telling them that, for these reasons, we expect payment within the time given. No law or rule forces us to extend credit to anyone, and they can quickly have their terms changed to COD or credit card. So, I always let them know that holding up payment of a large amount for a small dispute will cause us to hold up shipping.
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Jerry Schwartz, CBF, CM
Posts: 231 | From: El Segundo, Ca. | Registered: Jun 2001 | IP: Logged | | | |
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