Disputed Invoices in Canada: A B2B Playbook to Resolve Disputes and Get Paid Faster
In B2B collections, not every unpaid invoice is true non-payment. A huge percentage of overdue receivables stall because of one phrase:
“We’re disputing it.”
Sometimes the dispute is legitimate. Sometimes it is a delay tactic. Either way, if you do not have a consistent internal process, disputes become a black hole that kills cash flow and wastes your team’s time.
This playbook is designed for Canadian businesses that sell products or services on terms and want a practical way to resolve disputes quickly, protect their position, and know when to escalate.
What counts as an invoice dispute?
A dispute is any objection that the customer claims prevents payment, such as:
product not received or damaged
service not delivered as agreed
pricing mismatch vs quote or contract
missing purchase order or incorrect PO
change orders not approved
incomplete documentation (time sheets, delivery confirmations)
warranty or quality concerns
The real problem is not the dispute itself. It is the lack of speed and structure in resolving it.
The dispute resolution workflow that keeps you in control
1) Triage within 48 hours
The moment the customer says “dispute,” your job is to classify it fast:
legitimate issue: missing documents, real delivery gap, real quality problem
administrative stall: “we cannot find the invoice,” “AP is behind”
delay tactic: vague objections, moving goalposts, refuses to give specifics
Assign one owner internally. Disputes die when nobody owns them.
2) Require the dispute in writing
This is a simple but powerful step.
Ask for:
the exact reason for dispute
invoice number and amount disputed
supporting details, photos, or documents
what resolution they are asking for
timeline for review
If they will not put it in writing, it is often not a real dispute.
3) Build the “proof package”
Before you go back and forth, create a single file that includes:
signed agreement or quote approval
PO and invoice copy
delivery confirmation or acceptance proof
emails approving work, milestones, or changes
time sheets or work logs
any prior payment history
This package matters if you need to escalate to a third party or legal action.
4) Separate the undisputed amount
If only part of the invoice is disputed, use a standard move:
“Please pay the undisputed portion now, and we will resolve the rest by X date.”
This keeps cash moving and tests whether they are acting in good faith.
5) Set a dispute deadline and escalation path
Most businesses leave disputes open-ended. That is where you lose.
Set a clear timeline:
Day 0: dispute raised
Day 2: dispute details due in writing
Day 7: your review complete and proposed resolution issued
Day 14: final decision and payoff due
Day 15+: final notice, then escalation
In Alberta, Vanguard notes accounts should be under the two-year limitation window for legal action when litigation is considered, which is another reason to keep disputes from dragging on indefinitely.
6) Use credit holds strategically
If a customer is disputing and not paying, stop extending credit.
Credit holds are not emotional. They are risk management:
no new deliveries
no new work on terms
deposits required if you continue
This often resolves the “dispute” quickly.
7) Know when to escalate to collections
Send a disputed file to collections when:
they refuse to document the dispute
they keep changing reasons
they agree to resolution but still do not pay
your internal team has exhausted reasonable attempts
the customer is ignoring you
A collection agency can act as a structured third party, pursue payment, and keep documentation organized. Vanguard highlights national reporting to major credit bureaus as a lever in recovery, which can shift a debtor’s priorities quickly in many cases.
How to prevent disputes from becoming bad debt
Disputes are easier to prevent than to fix. For B2B companies, a few operational upgrades make a big difference:
clear acceptance criteria in quotes and contracts
documented change order process
delivery confirmation habit (even simple email confirmation)
standardized invoice format with PO, job reference, and contact
defined dispute window in terms (example: disputes must be raised within X days)
If you tighten these basics, you reduce “gray area” and collect faster.
FAQ
If a customer disputes an invoice, should we stop collection activity?
Pause aggressive collection, yes. But keep structured follow-ups, require dispute details, and set deadlines.
What if they are disputing just to delay?
Your process will surface it. The key signals are refusal to provide specifics and constant changing reasons.
Can we send a disputed invoice to collections?
Yes, especially when it becomes clear the dispute is a stalling tactic or the debtor is non-responsive. Provide your proof package.
Will a collection agency handle disputes professionally?
A reputable agency will, and it helps preserve your reputation while keeping pressure consistent.