The Dispute Resolution Handbook

Every dispute follows the same general arc: something is wrong (or perceived to be wrong), someone needs to investigate, and someone needs to decide. The difference between a 3-day resolution and a 30-day resolution is whether you have a process for each step. This handbook provides both a universal framework and specific workflows for the five most common B2B dispute types.

Universal 5-Step Framework

Regardless of dispute type, every dispute should flow through these five steps. The framework ensures nothing is skipped and creates a consistent experience for both your team and your customers.

Step 1: Log

Capture the dispute immediately. Record the dispute type, dollar amount, the customer's claim in their own words, and the date received. If it is not logged in your system, it does not exist. Disputes that live only in email threads or in a collector's memory are disputes that slip through the cracks. Logging also starts the SLA clock, which creates accountability for resolution speed.

Step 2: Gather

Collect all relevant documentation before you start investigating. The original purchase order, your invoice, proof of delivery, service records, and any communication history between your team and the customer. Do not start investigating until you have the complete file. Partial information leads to partial conclusions, which leads to back-and-forth that extends resolution by days or weeks.

Step 3: Investigate

Compare the customer's claim to your records. Involve the right internal parties — operations for delivery issues, sales for pricing questions, shipping for quantity discrepancies. Set a deadline for the investigation. Without a deadline, investigations expand to fill whatever time is available, which is usually too much time.

Step 4: Communicate

Contact the customer with your findings. If they are right, acknowledge it quickly and clearly. Dragging out a dispute that you know is valid damages trust. If the customer is wrong, present the evidence professionally and factually. Propose a resolution either way. The goal is to close the dispute, not to win the argument.

Step 5: Execute

Issue the credit memo, adjust the invoice, or collect the remaining balance. Close the dispute in your system. Record the root cause for tracking purposes. This last step is where many teams fall short — the dispute is verbally resolved but never formally closed, which leaves it lingering on aging reports and creates confusion in future communications.

Pricing and Rate Disputes

The customer says the price on the invoice is wrong. This is one of the most common dispute types and typically one of the fastest to resolve because the data exists in your systems.

Workflow: Pull the original quote or contract. Compare the quoted rate to the invoiced rate. Check for any agreed price changes, volume adjustments, or promotional rates that may apply. If the error is yours, issue a credit memo within 48 hours — speed here builds significant trust. If the invoice is correct, send the supporting documentation to the customer with a clear explanation. If the disagreement persists, escalate to sales to resolve the relationship dimension.

SLA: 5 business days. Most pricing disputes should resolve in 2 to 3 days because the data is readily available.

Quantity and Delivery Disputes

The customer says they received less than what was invoiced. This is common in distribution, manufacturing, and any business that ships physical product.

Workflow: Pull the proof of delivery or bill of lading. Check for partial shipments that may have been invoiced together. Compare shipped quantities to invoiced quantities line by line. If a shortage is confirmed, issue a credit for the difference. If the full delivery is confirmed, send the signed proof of delivery to the customer with the quantity verification.

SLA: 7 business days. Delivery disputes sometimes require coordination with the warehouse or carrier, which adds time.

Quality and Service Disputes

The customer claims the product was defective or the service was deficient. These are typically the most complex disputes because they involve subjective assessment.

Workflow: Document the claim with specifics — what exactly is the deficiency, when was it discovered, what is the impact. Route to your quality or operations team for review. Request photos or other evidence from the customer if applicable. Assess the claim: is a full replacement warranted, a partial credit, or is the claim not supported by the evidence? If legitimate, determine the credit amount based on severity and impact.

SLA: 10 business days. Quality assessments take time, but communication should happen within 48 hours even if the investigation is ongoing.

Documentation and PO Disputes

The invoice was rejected because it is missing a purchase order number, has the wrong PO number, or does not match the customer's required format. These disputes are rarely about the money — they are about process compliance. But they hold up payment just as effectively as substantive disputes.

Workflow: Verify that the customer requires a PO on invoices. Check whether a PO was provided at the time the order was placed. If the PO exists but was not included on the invoice, resubmit with the correct reference. If no PO was obtained, work with the customer to secure a retroactive PO — most AP departments can accommodate this with manager approval. Resubmit the corrected invoice and confirm receipt.

SLA: 3 business days. These are administrative fixes that should be resolved quickly.

Payment Application Disputes

The customer says they already paid, or their payment was applied to the wrong invoice. These disputes are usually internal accounting issues on one side or both, but they create real friction when the customer believes their account is current and you show a past-due balance.

Workflow: Pull your payment records for the account. Check for unapplied cash — payments received but not matched to a specific invoice. Verify bank records for the payment in question. If the payment was misapplied, correct the application and send an updated account statement. If no payment is found, send proof of the open balance with supporting invoice detail and ask the customer to provide their payment reference number for tracing.

SLA: 5 business days. Payment tracing can require bank coordination which adds time.

Tactical Dispute Handling

Beyond the specific workflows, these tactical principles apply to every dispute:

• Never let a dispute go more than 24 hours without acknowledgment. Even if you cannot investigate immediately, confirm receipt and set expectations for when you will have an update.
• Own the timeline. Set expectations for when you will have an answer and then meet those expectations. If you need more time, communicate that proactively rather than letting the deadline pass silently.
• Document everything in your system, not in email. Email threads are where dispute history goes to die. If the collector handling the dispute leaves or is out sick, the next person should be able to pick up exactly where they left off from the system record.
• Separate the dispute from the undisputed balance. If a customer has $100,000 in open invoices and $15,000 is in dispute, collect the $85,000 that is not disputed. Do not let a dispute on one invoice hold up payment on everything.

Prevention

Track dispute root causes monthly. The top three causes should have active prevention projects assigned to them. Common fixes include improving PO capture at order entry so documentation disputes drop, adding a delivery confirmation process so quantity disputes get resolved at the dock instead of 30 days later, and standardizing pricing communication so rate disputes shrink.

Every prevented dispute saves an average of $1,336 in resolution costs and accelerates cash collection by 20 to 30 days on the affected invoice. If your team resolves 200 disputes per year and you can prevent 40 of them through upstream process improvements, that is over $53,000 in direct savings plus significantly faster cash collection on those invoices.

The best dispute process is one that makes itself less necessary over time. Measure dispute volume as a percentage of invoices, track the trend, and hold the organization accountable for driving it down quarter over quarter.