A/R Management & Automation
Collections Analytics
Customer Self Service Portal
Customer Invoice Distribution
Cash Application
Gaviti Disputes and Deductions
Credit Management and Monitoring
ERP Compatibility
Use cases

Invoice Discrepancy

What is Invoice Discrepancy?

Invoice discrepancy is a deviation from the norm that occurs during the invoicing lifecycle. For example, if a customer receives a good or product long after the predetermined delivery date, that customer may be entitled to claim a dispute on the original invoice amount since the company violated the terms of the customer contract.

The Causes of Invoice Discrepancy

Typically, a dispute between the customer and business regarding the product leads to a deduction in price and potentially, an invoice discrepancy. These disputes in accounts receivables could be from a number of factors, including:

  • Product quality. If a product arrives damaged or of poor quality, the customer may be dissatisfied and claim a dispute, potentially leading to A/R deductions and a payment discrepancy.
  • Pricing. Customers may have misunderstood the original pricing agreement or a disagreement about the price agreed upon in the contract.
  • Terms of payment. Unclear communications in the sales and invoicing process may lead a customer to not understand the terms of the original contract, leading to a dispute.
  • Payment constraints. A company could either be facing financial issues or have technical issues making it difficult for them to use the payment methods available. Or they may employ this method as a tactic when they are temporarily short of cash.
  • Billing errors. Mistakes happen. Your billing department may have accidentally sent multiple invoices to the same customer, or to the wrong customer name or address. Or they may have miscalculated shipping fees or taxes.
  • Late deliverables. When products aren’t delivered on time, it may violate the terms of the agreement, allowing a customer to claim a dispute.

Strategies for Managing Invoice Discrepancies

Invoice dispute management is the process for handling invoice disputes and collecting invoice discrepancies. Since collecting invoice discrepancies can consume a business’ time and resources, they proactively seek ways to minimize them.

These include:

  • Streamlining and automating the invoicing process. Eliminate manual processes and improve accuracy in the entire A/R process – from dispute management and resolution to credit management and monitoring. Automating and streamlining each of the different elements of the A/R process can significantly reduce invoice discrepancies.
  • Centralizing data in one place. A/R data should be available to not only your A/R and finance team, but also procurement and inventory, sales, and other important stakeholders. Delivering greater visibility into the A/R process fosters greater collaboration for solving disputes.
  • Encouraging clear communication. Clarifying the details goes a long way toward preventing many types of disputes. Businesses can improve their customer relationships by clearly communicating information within the invoice such as the payment terms, invoice number, invoice amount, and past invoices. Having the details clearly stated in each invoice is especially important for financial departments that are dealing with hundreds of invoices every week.
  • Collaborating to resolve disputes. Customers and businesses should work together to find solutions to their disputes that are leading to invoice discrepancies. For example, flexible and partial payment terms or alternate payment methods may be options in the case of payment constraints.
  • Improving the reconciliation process. By centralizing data and streamlining and automating the accounts receivable process, invoices can be quickly and accurately matched to purchasing orders, ensuring that billing is correct and goods or products are delivered.
  • Offering a range of payment options. If businesses deliver customers a range of payment options and a seamless and secure payment experience, it increases the likelihood of timely payments.

Minimize Invoice Discrepancies with Gaviti

Gaviti’s A/R invoice-to-cash management platform streamlines and automates the entire accounts receivable process to optimize it and improve A/R performance, all with minimal involvement from your IT team. For example, its Collections Analytics module centralizes data in one place, giving access to key metrics and KPIs of both the A/R team and individual collections team members to executives and stakeholders across the organization. This ability to gain insights and visibility into the A/R process fosters better communication and encourages greater collaboration among different team members, helping to resolve disputes more quickly and minimize invoice discrepancies.

The different elements that facilitate the streamlining and automation of the accounts receivable process include:

  • Disputes and deductions. Code and categorize disputes for more accurate classification of deductions. Gain insights on past disputes to proactively guard against future disputes, and continuously monitor your Days Deductions Outstanding.
  • Cash application. Leverage remittance information provided by customers, such as invoice numbers or payment references, for more accurate payment matching. This extends to A/R data located in different regions and different or multiple ERPs.
  • Credit monitoring and management. Receive real-time alerts related to credit ratings, financial health, and any other factors that might change your customer’s credit limit. Automate the credit application process for both new and potential customers.
  • Collection Analytics. A/R data should not only include basic KPI and metrics for accounts receivable performance, but more advanced data such as DSO and collections rate, and also Median Days Delinquent (MDD) and payment forecasting. A/R managers should be able to measure performance for both A/R teams and each individual collector.
  • Customer self-service portal. Enhance the customer payment experience, minimizing overdue invoices by offering a wide range of payment options (e.g., ACH transfers, electronic wallets, debit and credit cards) and payment gateways, ensuring vendors comply with relevant regulations and legislation.

Want to learn more about how your business can streamline the A/R process and minimize invoice discrepancies at the same time? Speak to a Specialist to see how Gaviti works.

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