How to handle a disputed invoice

Short answer

1. Hold the bill. Do not pay the disputed part.
2. Write to the supplier with the exact problem.
3. Agree a credit note or corrected invoice.
4. Record it against the bill, then pay what is left.

Before you start

Collect:

• The invoice
• The purchase order or quote
• The delivery docket or timesheet
• Any email that set the price

The free invoice dispute letter generator writes the letter for you.

The manual way in Xero and MYOB

1. Hold the bill. In Xero leave the bill as a draft or awaiting approval so it does not go in the next pay run. Add a note on the bill that says what is disputed and who is chasing.
2. Find the problem. Compare the invoice to the PO and the delivery. Name the line, the amount and what you expected.
3. Write to the supplier. Include the invoice number, the problem, the amount and what you want. Pay any part you agree with.
4. Agree the fix. Ask for a credit note or a corrected invoice.
5. Record the credit. In Xero go to Business > Bills to pay and add a new credit note, then allocate it to the bill. In MYOB enter a supplier return or debit against the bill.
6. Pay the balance. Keep the email thread with the bill.

Limits: Xero has no dispute status. A good note on the bill and a team rule are all you have.

The Pulsify way

Pulsify helps you find the dispute before you pay.

1. Forward the invoice to your Pulsify address.
2. Pulsify matches each line to its PO. It flags quantity or price that differs from the PO, and lines that are not on the PO.
3. It flags a possible duplicate.
4. Reject the bill with a reason, or send it back to an earlier step with a reason. The reason is recorded on the bill.
5. When the corrected invoice arrives, forward it and approve it. It is created in Xero or MYOB.

Worked example

Example Plumbing Supplies bills you $3,300 including GST for 100 fittings at $30 ex GST. Your PO says $27 each and 100 fittings.

The difference is $3 per fitting. That is $300 ex GST or $330 including GST. You write to the supplier, they agree and issue a credit note for $330. You pay $2,970.

Common mistakes

• Paying first and arguing later. It is harder to get money back.
• Disputing by phone only. Put it in writing.
• Leaving the credit note unallocated. The aged payables report then overstates what you owe.

Next step

Book a call to find out how customers have saved hours per week after switching. See the PO matching guide and the invoice checks guide. For late payment interest rules in your contract, try the late payment interest calculator.