A customer who says they will not pay is not the same as a customer who says they dispute what they owe. The first is a debtor. The second may be a debtor, or they may have a legitimate claim that needs to be resolved before recovery can proceed. Conflating the two is one of the most common — and costly — errors in commercial credit.
What a genuine dispute looks like
A genuine dispute typically arises early: within days or weeks of an invoice being issued. It is specific — the customer identifies the particular invoice, the particular line item, or the particular deficiency in the goods or services supplied. It is supported by something: a written complaint, a return request, a record of the problem being raised at the time. And it is proportionate: the disputed amount corresponds to the alleged issue.
A customer who contacts you within two weeks of receiving an invoice to say that three of the ten items were not delivered, and who can point to the delivery receipt that confirms it, has a genuine dispute on a defined amount. The undisputed seven items are a clean debt.
What payment avoidance looks like
Payment avoidance dressed as a dispute typically arises late — often after the first formal demand has been issued. The complaint is vague: "the quality wasn't right," "we weren't happy with the service," or "there was an issue we need to investigate." It was not raised at the time of supply. It covers the full invoice amount rather than a specific component. And it coincides with information suggesting the customer is under financial pressure.
This pattern does not mean the complaint is fabricated — but it does mean it warrants scrutiny before you adjust your recovery strategy around it.
The evidence test
Apply a simple test: ask the customer to put the dispute in writing and identify the specific invoice, the specific issue, and what resolution they are seeking. A customer with a genuine dispute will do this without difficulty. A customer using the dispute as a tactic will either not respond, produce something so vague as to be meaningless, or suddenly become willing to discuss payment.
The written response also creates a record. If the matter proceeds to litigation, the debtor's documented position at the time of demand is highly relevant.
How to handle a genuine dispute
Separate the disputed amount from the undisputed balance. Pursue the undisputed amount through normal recovery channels — do not allow the dispute over one component to delay recovery of the rest. Investigate the disputed component genuinely and promptly. If the claim has merit, resolve it. If it does not, document your investigation and resume recovery of the full amount.
What a dispute does to your recovery timeline
In most jurisdictions, a tribunal or court will expect a creditor to have made reasonable efforts to resolve a genuine dispute before proceeding to judgment. Ignoring a legitimate complaint and pressing for payment can be characterised as unconscionable conduct. Having a clear, documented process for investigating and responding to disputes — and for separating disputes from clean debts — protects your recovery and your conduct record.
If you are dealing with an account where the debtor has raised a dispute and you are unsure how to proceed, speak to Merion.