One common reason for business litigation is payment disputes. Payment issues create cash flow issues for businesses, and the associated litigation can be costly as well. To protect your business and preserve your relationships with your company’s clients and partners, you should take steps to reduce the risk of common payment disputes.
There are some tips that will help you navigate this terrain successfully.
Clear expectations
Clear, detailed payment terms and expectations help to reduce the risk of uncertainty and errors in business payments. Many payment conflicts result from unclear invoicing. Payment terms should include information about acceptable methods of payment. With many digital payment solutions, each party on the invoice should understand the acceptable payment methods for each relationship.
Written contracts
Every business relationship depends on the mutual agreements between the parties. Put those agreements in writing. Written contracts ensure that everyone involved knows exactly what to expect. You should also include information about dispute resolution and avenues for further information.
Regular reconciliations
Reconciling accounts on a regular basis helps to reveal any outstanding payments. Identifying and addressing payment issues early through reconciliation helps you avoid potential payment disputes.
Consistent enforcement
One common source of payment disputes is inconsistent enforcement of payment policies. When you fail to maintain your enforcement efforts across the board, it can indicate preferential treatment or unfair targeting, which results in legal disputes. Establish policies for enforcement of outstanding accounts and enforce those policies with every client.
According to Entrepreneur, 43% of small businesses face litigation or the threat of a lawsuit. Reduce your risk of litigation and protect your company’s financial stability with these tips.