What NOT to do when a client disputes your invoice

Dec 1, 2020 | Accountants, Client service, Strategy

We’ve all had them. The client who sends a detailed letter/email listing a load of issues and problems.  Sadly I can recall having the odd one or two such missives when I was in practice.

I remember the feeling of indignation. The frustration at the unfairness of the accusations. The unreasonableness of the assertions and the one-sided nature of the complaint which totally ignored anyone’s perspective other than that of the client.

Yes, I know. The client is always right. Except when they’re not. Sometimes they’re wrong, mistaken or liars. Especially when it comes to disagreements over fees.

Even if you generally aim to charge fixed fees agreed in advance, there will still be occasions when you provide advice or get involved in a project you couldn’t ‘price’ upfront.

I recall one occasion many years ago when I received a detailed list of issues from a client in response to the invoice issued by my tax manager. I went through the list and made a few notes. I gave these and the client’s letter to the tax manager to comment on. We crafted a point by point response. We were satisfied we had addressed all the points thoroughly and fairly. We sent our letter. This had the inevitable consequence.

We got another letter. With the benefit of hindsight I now suspect that the client was playing with us and playing for time. I don’t remember if there was another exchange of letters or not, but I do recall a subsequent meeting where he and I went through things line by line again.  Eventually the fee was paid and the final amount was not much different to the original bill.

However I had made a fundamental mistake in replying to the complaint letter point by point.

What I should have done was to pick up the phone, apologise for any misunderstandings and ask what the client wanted. And then deliver that or discuss it in order to reach a fair result as quickly as possible.

In recent years I have helped a number of the accountants I mentor to better resolve fee disputes they are facing. And I have also then encouraged them to do things differently in the future to avoid future fee disputes.

The key piece of advice I always share is that few clients WANT a line by line, point by point response to their letter of complaint. If you send a detailed reply this invariably simply invites another round of the same game.

Better to find out what the client wants. Do not assume it is obvious.

Perhaps the client is simply trying to buy some time before they will pay you in full, maybe they just want a small reduction in the fee or a change in the personnel dealing with their affairs. Maybe they want a big reduction in the fee. Maybe they are going to be so unreasonable that YOU should decide you don’t want them as a client any more.

Far better to reach one or other of those outcomes asap and get paid what you’re going to get paid asap. Don’t you agree?

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