Definition
An invoice dispute is a disagreement in which a client refuses to pay all or part of an invoice because they believe it is wrong, for example due to pricing errors, unapproved charges, incomplete work, or quality problems. Disputed invoices are usually put on hold until the issue is resolved, which delays payment for the whole amount.
Also called: Disputed invoice, Billing dispute
Invoice dispute in practice
Respond quickly and in writing. Ask the client exactly which lines they dispute and why, and check the invoice against the quote, contract, change orders, and delivery records. Many disputes turn out to be simple errors or missing information.
If only part of the invoice is disputed, ask the client to pay the undisputed portion now. Issue a credit note or corrected invoice for any agreed adjustment rather than editing the original.
Prevent disputes by getting scope, prices, and changes approved in writing before the work, and by sending clear, itemized invoices that reference those approvals.
Example
A client disputes $600 of a $4,200 invoice for extra revisions. The designer shows the signed change order for $400 of the work, agrees to drop the remaining $200, and issues a $200 credit note. The client pays $4,000.
Frequently Asked Questions
Does a client have to pay the undisputed part of an invoice?
Generally they should, and many contracts require it. Ask in writing for payment of the undisputed amount while the rest is resolved.
What if a dispute cannot be resolved?
Consider mediation, then small claims court or other legal action for larger amounts. Keep all documents, including the contract, approvals, and correspondence.
Related terms
- Credit note A credit note is a document a seller issues to reduce or cancel the amount owed on a previously issued invoice.
- Change order A change order is a documented agreement to modify the original scope of work, including the effect on price and timeline.
- Chargeback A chargeback is the reversal of a card payment initiated by the cardholder's bank after the customer disputes the charge.
- Collections Collections is the stage of pursuing an unpaid invoice after normal reminders have failed, through a formal demand letter, a collections agency, or legal action such as small claims court.
- Itemized invoice An itemized invoice is an invoice that lists each product, service, or charge on its own line with a description, quantity, unit price, and line total, rather than showing a single lump sum.
This page is for general information only and is not legal, tax, or financial advice. Rules change and vary by location, so consult a qualified lawyer or accountant about your situation.