What to do first when someone calls your unpaid invoice a dispute
Stop and gather the complete file
Someone owes you money for work you have done. You follow up, and they reply with a complaint about the scope, the quality or the price. They use the word dispute, and you wonder whether that changes your position.
Before you respond, gather every document that relates to the job. That includes the contract or purchase order, quotes, variation approvals, invoices, delivery dockets, site instructions, emails and text messages. Include payment records if the customer has paid part of the amount.
Write down what you invoiced, what has been paid and what the customer now says is wrong. Keep what the documents establish separate from what you remember being agreed.
This file tells you what you can prove. It also shows whether the complaint was raised during the job or only after the invoice became overdue.
Distinguish a genuine dispute from a delay tactic
Not every complaint is a genuine dispute. Some customers stay silent and hope you give up. Others raise vague objections that give them cover to hold off paying.
A genuine dispute usually involves a concrete disagreement that was raised while the work was underway. A variation that was discussed but not approved in writing, a claimed defect that was notified on site, or a scope issue that both sides tried to resolve.
A delay tactic often appears only after the invoice is overdue. The complaint may be vague, inconsistent with earlier communication, or raised for the first time when you ask for payment. The customer may ignore your requests for detail or keep promising to provide information without doing so.
Review your file against the customer's complaint. Does the paperwork support what they are saying, or does it show a different picture? Did they raise the issue during the job, or only when the money became due?
Respond in writing with a clear position
Once you have reviewed the file, send a brief written reply. Acknowledge that you have received their complaint, restate what the contract or agreement required, and refer to the documents that support your position.
If the complaint involves a defect or quality issue, ask for specific details: what is alleged to be defective, where it is located and when it was first noticed. If the complaint involves scope or price, refer to the relevant purchase order, quote or variation approval.
Set a short deadline for a substantive reply, usually five to ten business days. Explain that if you do not receive a detailed response or payment by that date, you will seek advice about your options.
Keep the tone professional and factual. Avoid accusations, but do not accept assertions that contradict your records. This reply creates a clear record of your position and tests whether the customer will provide genuine detail or continue to delay.
Consider security of payment options if you are in construction
If you carried out construction work in Australia and submitted a valid payment claim, security of payment legislation may give you a statutory process to pursue payment.
The legislation operates in every Australian state and territory, but the rules, deadlines and procedures differ between jurisdictions. In New South Wales, for example, a respondent who receives a payment claim must provide a payment schedule within ten business days or the time specified in the contract, whichever is earlier. If they do not, they may lose the right to dispute the amount in adjudication.
Security of payment processes involve strict time limits. Whether the process is available to you depends on your contract, the state or territory, when the work was done and whether your payment claim meets the legislative requirements.
If the customer's complaint was not put in a formal payment schedule within the deadline, or if they ignored your payment claim altogether, their ability to raise reasons in a later adjudication may be limited. Do not assume that calling something a dispute gives them an automatic right to withhold payment under this legislation.
Source: NSW Government , Responding to a payment claim under Security of Payment laws
Check what other recovery options apply
Security of payment adjudication is not the only option, and it is not available in every situation. Depending on the contract, the amount, the age of the debt and the customer's circumstances, you may consider a formal letter of demand, a statutory notice or court proceedings.
If the customer is a company, check whether it is still trading and whether any insolvency appointment has been made. Recovery from a company in administration or liquidation follows different rules and may reduce what you can recover.
Do not let the word dispute convince you that you are stuck. In many cases what the customer calls a dispute and what the law recognises as a defence are not the same thing. Your file and the applicable law determine your position, not the label someone else applies.
The right next step depends on your facts. Bring your file to an adviser who can assess the documents, the applicable deadlines and the customer's current position. That assessment tells you whether ordinary follow-up is still appropriate or whether a formal process is needed now.