Are Customer Disputes Worth It?

Perhaps you shouldn't spend too much energy on battles you won't win, but you shouldn't overlook customer disputes, either.

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The old adage that the customer is always right is true — at least when it comes to resolving collection disputes.

A new study by San Mateo, Calif.-based Aceva Technologies finds that 90 percent of disputes are settled in the customer’s favor. Moreover, the average length of time to resolve each dispute is four weeks — time spent mostly on researching what went wrong.

The findings do not surprise Shelley Thunen, CFO of IntraLase Corp., an Irvine, Calif.-based laser-technology provider. In customer disputes, she says, “there is a lot of paperwork going back and forth.” Plus, “most companies want to ensure customer satisfaction,” she adds, “so they tend to give them the benefit of the doubt.”

Given the impact these disputes have on days sales outstanding, however, “finance has to fix the root causes,” says Aceva COO Sanjay Srivastava, who blames disputes on the “complexity within the quote-to-cash” process. It’s not just the cost of resolving disputes or the impact of inflated DSO on working capital that should concern companies, he adds, but also the attention accounts receivable must pay to “problems that shouldn’t exist in the first place.”

The findings raise the question: Why spend so much energy on a battle that you won’t win? “If you chase down these disputes, it may cost you money,” says Srivastava. “But you can’t overlook them; you certainly don’t want to set a precedent.”

Losing Battle
89.5% Disputes focused on large accounts or large past-due accounts
50% Average time spent contacting customers seeking resolution
90% Disputes settled in the customers favor

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