Disputed invoices

What is a disputed invoice clause?

A disputed invoice clause says what happens when the customer does not agree with an invoice. It sets how and when the customer has to object, what it has to pay in the meantime, and how the two sides settle the disagreement.

Without one, a single wrong line item can hold up a whole invoice. The supplier treats the unpaid amount as late, the customer treats it as justified, and both sides argue about breach instead of the number. The clause turns that into a routine process.

It usually sits in the billing and payment terms of a service agreement, a supply contract or a master service agreement.

What a good disputed invoice clause covers

1. A deadline to object. For example within 15 days after receiving the invoice. After that, the invoice counts as accepted or the right to dispute it ends.
2. Written notice with reasons. Which line items, which amounts, and why.
3. Payment of the undisputed part. The customer pays everything it does not dispute on time.
4. A way to resolve it. Good-faith talks within a set number of days, then escalation to senior managers, then the contract’s dispute resolution process.
5. What happens after. The disputed amount is paid within a few days if the supplier was right, or credited if the customer was.
6. Interest. Whether interest runs on a disputed amount that turns out to be due, usually at the contract’s default interest rate.
7. Services during the dispute. Whether the supplier must keep working, or may suspend services if the undisputed part stays unpaid.

Two ways to handle a disputed amount

Paying the undisputed part is the more common and more balanced model. The sample clauses above include both.

Disputed invoice clause example

How to dispute an invoice

1. Check the contract. Find the deadline, the notice form and the address for notices.
2. Pin down the error. Compare the invoice with the agreed prices, the work order and what was delivered.
3. Send written notice in time. Name the invoice number, the disputed line items and amounts, and the reason, with any proof.
4. Pay the undisputed part on the due date, so the dispute stays about the disputed amount only.
5. Keep a record of the talks and agree the outcome in writing, as a credit note or a corrected invoice.

Keeping payment terms within reach

A dispute is only as strong as your notice: miss the deadline and the invoice may stand. In fynk, AI Search finds the payment and dispute terms of any contract in plain language, so you know the deadline and the notice address in seconds. Tasks and reminders put the deadline on the right person’s list, so the objection goes out in time.

Which contracts have a disputed invoice clause?

Service agreements, master service agreements, construction contracts, consulting and time-and-materials agreements, and supply agreements. These free templates include one:

Related clauses

• Billing and payment terms Billing and payment terms, also called invoice terms and conditions, set out when you invoice, when the customer has to pay, how they can pay, and what happens if they pay late or dispute an invoice. They belong in the contract first and are repeated on every invoice.
• Payment terms and conditions Payment terms and conditions outline the specifics of how and when a party will be compensated for goods or services provided. They typically include details on the payment method, due dates, any interest or penalties for late payments, and any discounts available for early payments.
• Right of set off The right of set-off is a contractual clause allowing one party to offset mutual debts with another party by deducting the owed amount against any obligations the other party has to them. This provision helps reduce the risk of default by enabling both parties to net out their liabilities and receivables.
• Late payment penalty A Late Payment Penalty clause stipulates that if a payment is not made by its due date, the party responsible for the payment will incur an additional fee or penalty. This clause incentivizes timely payments and compensates the payee for any inconvenience or financial impact caused by the delay.
• Right to audit The "Right to Audit" clause grants a party the ability to review and examine the financial records, systems, and practices of another party to ensure compliance with contractual terms and accuracy of financial reporting. This clause is often included to provide transparency and accountability, and to safeguard against fraud or mismanagement.
• Dispute resolution The dispute resolution clause outlines the methods by which any disagreements arising from a contract will be managed, specifying procedures such as negotiation, mediation, arbitration, or litigation. This clause aims to provide a clear framework for resolving conflicts efficiently, thus minimizing potential disruptions to the contractual relationship.

Frequently asked questions

• What is a disputed invoice?

  An invoice, or part of one, that the customer does not accept, for example because of a wrong price, a wrong quantity or work that was not done. Most contracts let the customer withhold the disputed part while it is being resolved.

• Do I have to pay an invoice I dispute?

  Usually only the undisputed part, if the contract says so. Some contracts require payment in full first, with a credit later. Check your contract: it decides.

• How long do I have to dispute an invoice?

  As long as the contract allows, often 10 to 30 days after receiving the invoice. Without a set deadline, object as soon as you spot the problem and in writing.

• Can a supplier stop work over a disputed invoice?

  Only if the contract allows it. Many clauses require the supplier to keep working during a good-faith dispute, and allow suspension only when undisputed amounts stay unpaid.

• What should a disputed invoice letter include?

  The invoice number and date, the disputed line items and amounts, the reason with supporting documents, the amount you will pay now, and a request for a corrected invoice or a credit note.