The importance of managing disputes within Accounts Payable (AP) processes should not be underestimated.
Indeed, strong supplier relationships enhance a company’s corporate reputation.
Suppliers’ perceptions of your company are a key factor in maintaining a competitive edge, as you, like others, aim to secure top suppliers offering the highest quality products and services.
This challenge becomes even more difficult when dealing with cross-border suppliers.
What is a dispute in the context of AP?
A dispute typically arises when the execution, validity or timing of a transaction is called into question. When a party raises a dispute, you can either accept it or contest it by providing evidence of the transaction’s legitimacy.
A dispute needn’t necessarily involve a supplier. It can also concern an internal entity and arise from a lack of clarity or communication among various business departments.
Some examples of causes of internal disputes include:
- Discrepancies in invoices due to internal errors.
- A missing expense justification from a colleague (e.g. for travel expenses) that requires verification.
- Lack of or late approval by an internal supervisor of a service timesheet.
How does dispute management work?
Maintaining a good relationship with suppliers requires constant attention to the exchanges that occur with them. You should continuously be asking:
- Have suppliers provided all the necessary paperwork to initiate the relationship?
- Have they adhered to the terms of our agreement?
- Are there any issues or disputes related to working with them?
- Are there any communication challenges?
Common types of disputes relate to:
- Billing errors, including mistakes in pricing and discounts.
- Double billing.
- Discrepancies between invoices and purchase orders.
- Incorrect delivery of goods and services.
- Provision of defective or sub-standard goods or services.
- Partial or non-payment by customers.
Challenges that can emerge in managing disputes include:
- Time-consuming manual processes.
- Ongoing analysis.
- Legal requirements.
- Complexity of issue resolution.
To ensure success, dispute management must be implemented as part of a global AP strategy and should include clear policies, processes, and procedures to promptly resolve disputes.
Moreover, since these issues can take time to resolve once they arise, astute companies mitigate the risk by deploying dispute prevention strategies.
Benefits of Automating Dispute Management
Automating credit-related dispute management offers significant benefits to businesses, such as:
- Reducing the costs of the related manual work and freeing staff members to focus on more productive or revenue-generating tasks.
- Ensuring that disputes are handled efficiently and accurately by eliminating human error and the delays associated with common manual methods.
Comply’s Dispute Management module simplifies the tracking of all activities carried out by the accounts payable team making it quicker and easier to resolve issues involving either internal or external resources that may arise during invoice verification.
With Comply, a dispute can be:
- Created during invoice verification.
- Communicated to the supplier or internal entity.
- Furnished with further information as it is discovered.
- Resolved positively or negatively by the responsible party.
- Used to automate the processing of Credit Notes.
- Analyzed to build Vendor Rating statistics.
- Followed up and actions or resolution can be solicited