How to Deal with Discrepancies in Accounts Receivables

Managing accounts receivable may appear like a simple task: issue the invoice, get payment, and move on. However, things are rarely so easy in practice. Errors occur. Payments are made later than scheduled, invoices and payments don’t match. These are known as inconsistencies, and if you don’t take prompt action, they can negatively impact your cash flow, cause misunderstandings, and even sour ties with clients.

So, how do you handle these discrepancies effectively? Let’s break it down step by step.

1. Find the Problem First

The first thing you need to do is figure out exactly where the problem lies. Is it a simple typo? Did someone enter the wrong amount? Was there confusion on the client’s end about what they’re supposed to pay? Discrepancies often come from:

Data entry mistakes – numbers get entered wrong.

Miscommunication – the customer was billed for something they didn’t agree to or weren’t expecting.

Partial payments – the client didn’t pay the full amount.

Technical issues – maybe your accounting software didn’t generate the invoice correctly.

Don’t start fixing things until you know the root cause. Review the original invoice, payment records, and any correspondence with the client.

2. Talk to the Client (But Don’t Overcomplicate It)

Once you know what’s wrong, get in touch with the customer as soon as possible. The longer you wait, the harder it becomes to resolve the issue. When you reach out, don’t make it complicated or overly formal. Just get to the point. Here’s how you should approach it:

Be direct: Mention the invoice number, date, and what’s off.

Provide evidence: Send over a copy of the invoice, any payment details, or relevant emails.

Offer a solution: Tell them what you think the issue is and how you plan to fix it.

The goal is to fix the problem, not to get into a back-and-forth about who’s at fault. Make it clear what’s needed to fix the issue, whether that’s the client paying the remaining balance or you issuing a corrected invoice.

3. Fix the Books

Once you’ve contacted the client, you’ll need to adjust the numbers on your end. This could mean issuing a revised invoice, reapplying the payment to the correct account, or providing a refund/credit if necessary. Make sure your records are updated accurately, so there’s no further confusion.

If the customer overpaid, decide if you’ll issue a refund or hold the extra amount as a credit for future transactions. If they underpaid, politely but firmly make it clear how much they still owe and when you expect the payment.

4. Track Recurring Issues

If differences occur frequently, there may be a more serious issue. It might be that there is a recurrent problem in your accounting software or that your billing procedure is unclear. Maintain a record of the problems you encounter. This will enable you to identify trends. Do some clients routinely misread their invoices? Are errors occurring in the same division?

Create a system where you log these discrepancies. Track why each one occurred and how it was resolved. Over time, this will help you figure out how to prevent them from happening in the first place.

5. Prevent Discrepancies Before They Happen

Let’s now discuss prevention. Preventing disparities from occurring in the first place is the greatest approach to handling them. Here are a few simple strategies to streamline your workflow:

Automate invoicing: Automated invoicing reduces human error, ensuring consistency in amounts and details.

Send clear, detailed invoices: Make sure your invoices leave no room for confusion. Clearly list the products/services, prices, quantities, and payment terms.

Follow up early: Don’t wait until an invoice is months overdue to realize something is wrong. Send reminders before the due date and follow up right after the deadline passes.

Regular reconciliations: Regularly review your accounts to catch any discrepancies before they spiral out of control.

Clear communication: Make it easy for customers to get in touch if they have questions about their invoice. Sometimes a quick call can avoid a big headache down the road.

6. When It’s Time to Call for Help

It could be time to see an expert if you’re handling inconsistent or complicated issues. An accounts receivable specialist or Chartered Accountant (CA) can assist in identifying persistent problems or provide alternatives you may not have thought of. Avoid allowing a little issue to turn into a significant headache.

Questions to understand your ability

Que.1 What’s the first thing you should do when there’s a problem with accounts receivables?

A) Shoot an email to the client right away

B) Issue a credit or refund

C) Figure out what went wrong

D) Blame the software

Que.2 When contacting the client about a discrepancy, what should you focus on?

A) Pointing fingers

B) Getting into a long debate

C) Showing them what’s off and how to fix it

D) Asking for payment in full with no questions

Que.3 Which of these often causes a mess in accounts receivables?

A) Overcommunication

B) Partial payments

C) Early payments

D) Detailed invoices

Que.4 How can you stop these receivables issues from happening in the first place?

A) Keep invoicing manually

B) Ignore recurring problems

C) Automate invoices and make them clear

D) Wait till invoices pile up

Que. 5 When should you call in a pro to help with accounts receivable problems?

A) When things get messy and complex

B) When the client disagrees

C) Right after you issue an invoice

D) After your first mistake

Conclusion

Discrepancies in accounts receivables happen to every business, and they can cause a lot of confusion if not handled quickly. The key is to be proactive, address the problem as soon as it arises, and work toward a solution that’s fair for both parties. Staying on top of your accounts, automating processes, and keeping clear communication with your customers can help prevent most issues before they become major headaches. Keep things simple, act fast, and always be ready to learn from mistakes.