Money matters: Understanding invoice processing disputes in logistics

Image of two people disagreeing over an invoice

What you will learn….

  • Understanding invoice processing disputes
  • Why is invoice dispute a challenge in logistics?
  • 4 invoice disputes that could be costing you money
  • Technology as a solution to invoice disputes in logistics
  • How Escrow Services can help settle invoice disputes?
  • Let’s Wrap Up!

Understanding invoice processing disputes

An invoice dispute is a major challenge faced by businesses or commercial organisations of all sizes where a customer or client disagrees with the charges and therefore, refuses to make payment. Invoice disputes can arise from human error in terms of accounting, misunderstanding, or when your customer does not have enough funds to pay. 

It is quite common for businesses to have disagreements over invoices, but if they are handled with relevant contracts along with billing and invoicing software, services and systems in place, such disputes can be quickly and efficiently resolved.

Why is invoice dispute a challenge in logistics?

Invoice disputes in logistics are a major challenge owing to the number of parties involved and the complexity of operations. There are a number of challenges in managing freight invoices and payments. A study mentions that 49 percent of fleet managers spend 1.5 to 2 hours on invoicing (Source: Netradyne). GoComet, a multi-modal logistics platform reveals that 75% of logistics leaders say most freight invoices do not match the final quotation. Thus, the logistics industry suffers a great deal due to continual shipment issues that can cause huge losses.

4 Invoice disputes that could be costing you money

  • Processing errors: Manual invoice processing in logistics is often prone to error in terms of inaccurate or incomplete invoices resulting from a lack of real-time visibility, missing documents, or carelessness.

  • Pricing disputes: Pricing disputes arise due to the difference in pricing between the payment that is charged and the one that was agreed upon initially by both parties. It may occur due to hidden costs or additional costs incurred during the process.

  • Payment constraints: When customers have issues with cash flow and request an extension on the payment schedule, a dispute arises in terms of charging a commitment fee or a late payment fee as compensation until the full payment is received.

  • Product Dissatisfaction: If the quality of the delivered goods and services does not meet the customer’s expectations, an invoice dispute might arise as the customer may decide to negotiate the price that was initially agreed upon by both parties. 

Technology as a solution to invoice disputes in logistics

Traditional invoice payment systems lack transparency, often result in accounting errors, and take an unnecessarily long time to process transactions. So, the best way to optimise cash flow and reduce time wasted on invoice processing in logistics is by switching to automated billing or invoice processing software, platforms or systems offered by technological advancements. It becomes easier, faster and more efficient to manage freight invoices and payments without losing receipts, handling enormous amounts of cash or making double payments.

How Escrow Services can help settle invoice disputes?

Having a formal contract or agreement in place for all business transactions is crucial. These legal documents can help resolve invoicing disputes quickly and efficiently. However, it is not always possible to keep contracts in place as it involves a lot of time and enormous amounts of paperwork. Fortunately, escrow services can be utilised for secure invoice processing in logistics. 

An escrow service acts as a mediator between two parties who make a transaction. It negotiates, secures the funds and ensures the delivery of products or services to the customer and the payment to the concerned party that provides the products or services. An escrow service helps with quick fund disbursement and prevents fraud. 

Let’s Wrap Up!

Managing freight invoices and payments is a complicated task that involves enormous amounts of paperwork and loss of time and is often prone to errors and disputes. Invoice disputes usually occur due to miscalculations while processing, pricing inconsistencies, payment constraints and product dissatisfaction that leads to negotiation or withdrawal of payment. However, invoice disputes can be handled efficiently through automated billing or  invoice processing software, platforms or escrow services.

Axlerate is a fintech platform for logistics that helps you simplify invoice payment management systems for logistics payments to provide uninterrupted cashflows through QR codes, payment pages, links, invoices and web integrations.

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