Avoiding Disputes Involving Unearned Discounts

Occasionally, customers will respond to a request that an unearned cash discount be repaid with an explanation of why they believe the discount was earned.  Often, their explanation involves an assertion that either the goods in question arrived late, or the invoice was not received in a timely manner.  Most creditors base the discount on the invoice date rather than the date the goods were received.  This way, creditors avoid having to track each order to see when the goods were received, or why shipments were delayed.

If a customer asserts they did not receive the invoice in a timely manner, an appropriate response is to explain that no other customer complained about not receiving invoices on that date, and that the debtor always have the option of contacting the creditor for a copy of the invoice during the discount period once they were aware goods were received but the invoice was not.

Occasionally, a customer will take a cash discount on an invoice that they claim was in dispute.  The problem with this excuse is that it can be used for any invoice not paid within the cash discount period.  The proper way to handle this problem is to allow the cash discount only on that portion of the balance due paid within the discount period.

Submitted by Michael C. Dennis, author of "1001 Collection Tools and Tips."