4 Types of Invoice Discrepancy (and How to Resolve Them)


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Thursday, April 7, 2022

There will inevitably be times when you have disagreements with suppliers regarding invoices. Here are some of the most common reasons why such issues occur and some tips on how to resolve them.

Article 5 Minutes
4 Types of Invoice Discrepancy (and How to Resolve Them)

Countless businesses around the world rely on healthy and smooth-running relationships with their suppliers.

If you're able to build strong connections with vendors, you can feel more confident of acquiring the products and services you need - whether it's the raw materials required to manufacture goods or technical support for your marketing - with reliable assurances around quality and time of delivery.

However, there are no cast-iron guarantees in business, and there will be times when you have disputes with your suppliers. One of the most common sources of disagreement is the invoicing process, which can be particularly sensitive seeing as vendors always want to be fairly and promptly paid, while customers want to ensure they're getting value for money.

With this in mind, it's useful to be aware of the types of invoice discrepancies you're likely to encounter and to have a clear process for managing them.

1. Basic factual errors

When you receive an invoice from a vendor, one of the first and most important steps is to check it for basic accuracy. That means looking at elements like:

  • The invoice number - specifically making sure it's not the same as an invoice you've received and paid in the past
  • Your company name and address
  • The provider's company name and address
  • The date of the invoice
  • Deliverables received and if they're accurately listed and priced
  • The date the goods or services were supplied
  • Total amount payable

It's not unusual for mistakes to be made when suppliers submit these crucial pieces of information, especially if they rely on manual data entry.

Some errors will be innocuous and easily rectified - a figure out of place in the invoice date, for example. However, other oversights - such as a miscalculation in the total amount payable - could have a more serious impact if they're not checked and queried.

When you spot a mistake, point it out to the supplier as soon as possible and make it clear that you won't be able to process the invoice until it's corrected.

Learn more: Understanding Accounts Payable: The CFO’s Complete Guide

2. Dissatisfaction with deliverables

It goes without saying that you should expect the products and services you receive from suppliers to be of a certain quality. When the deliverables don't meet your standards, but the vendor still expects payment in full, you should be ready with a plan to manage what could prove to be a difficult situation.

One of the most important things to bear in mind is the importance of specificity. Be as clear and detailed in your feedback as you possibly can, so the supplier knows what you expect from them and what changes you would like to see before going ahead with payment.

This focus on exactitude is important if you want to maintain professional relations with your providers and resolve problems as quickly and efficiently as possible.

To reduce the risk of the same issue occurring again in the future, make sure every contract you enter into with a third party includes a clear service-level agreement, as well as a precise rundown of what you expect them to provide. This gives you something to refer back to should a dispute arise over deliverables at a later date.

3. Pricing disputes

Along with the quality of the product or service you receive, the price you pay for it is the most important aspect of any supplier relationship. You should feel confident that you're paying a fair amount for what you're getting, and if you don't, be prepared to talk to your vendor about it, with a focus on reaching a mutually agreeable solution.

There are many reasons why you might not feel happy with the overall amount you're expected to pay, such as unexpected changes in the provider's rates, hidden charges or an unplanned expansion in the scope of the service.

When the time comes to have a frank discussion about these issues, make sure you're ready to argue your case, with clear evidence and data to back it up. In many cases, a constructive conversation will be enough to reach an agreement that all parties are happy with, but it's important to have a more detailed dispute resolution procedure in place should it become necessary.

4. Timesheet discrepancies

Closely linked to price is the amount of time your vendor says they spent on delivering your service. You're likely to encounter situations where sellers claim the work took longer than expected due to unforeseen circumstances, and particularly unscrupulous suppliers might inflate their hours as much as possible to get more money out of you.

One way to mitigate this risk is to state at the beginning of any contract or new relationship that you expect vendors to keep itemized timesheets detailing the work and outcomes you're paying for. This will make it easier for you to judge the fairness and accuracy of their invoices, and to pinpoint certain processes or tasks you have questions about.

In many cases, smooth, hassle-free invoicing depends on being clear and specific in your expectations from the outset, so all parties understand the terms of the agreement and can work towards mutually beneficial results.

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