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Profit & Growth Tips for Digital Agencies

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How to Stop Customers from Challenging Your Agency’s Invoices

Posted by Laura Hernalsteen on Mar 8, 2016

How_to_Stop_Customers_from_Challenging_Your_Agencys_Invoices.jpgWhen a customer challenges your agency’s invoices it damages your relationship. It suggests a lack of trust on their part and a mismatch between the service you’re providing and how they perceive its value.

Having your invoices challenged can become time-consuming and costly as you have to justify your work and your pricing, or agree a compromise with your customer. So today I’m looking at the main reasons why your customers might be challenging your invoices, and offering three ways to prevent them from doing so in the future.

3 Reasons Why Customers Might Challenge Your Invoices

1) Project Deliverables Don’t Match Their Expectations

This suggests communication problems between the customer and your agency, or unclear objectives agreed in your contract.

2) The Price is More Than They Expected

This suggests a misunderstanding of how long a project will take (i.e. how much time you would have to bill for) or how much work was needed to complete the project.

3) They Don’t Understand Your Pricing

In this case the customer would request a more detailed pricing breakdown rather than directly challenging your invoice, but it suggests a misunderstanding of how your agency is working and charging for their deliverables.

How to Prevent Customers Challenging Your Invoices

Have the Right Customers

The best customers for your agency will be a good fit in terms of their projects, but also in terms of shared values and way of working.

To get the best-fit customers, generating high-quality leads for business opportunities should be a priority, as should implementing a lead qualification process to identify the best-of-the-best. You will be more likely to build up a good working relationship with best-fit customers than those with whom you have clashes in terms of working values and processes.

If you have a customer with whom you have a good working relationship, and who understands how and why you work in a certain way, then it’s likely that both parties will have a shared understanding of your billing process, any delays you’ve encountered, and your customer’s desired outcome in terms of project deliverables.

This means your agency will be better positioned to ensure that deliverables meet expectations, and your customer will understand what they’re paying for. If you keep your customers happy, chances are they won’t challenge your invoices.

Provide Clear Documentation

It is vital that your contracts and invoices are very clear, and match up in terms of work promised and work delivered.

Your contracts need to clearly define and set expectations of the outcomes of your project so both you and customer understand what they will be billed for. And your invoices need to show exactly what you’re billing for – for example, the number of hours worked (if you work on a billable hour model) or precise deliverables (if you work on a value-based or fixed price model).

This will ensure that client expectations will match up with the work your agency produces, so they don’t challenge your invoices on that aspect. Additionally, clear, precise invoicing prevents pricing queries.

Communicate

The most important thing you can do to stop customers challenging your invoices is to communicate with them.

Your customer’s expectations will often change during the course of the project. Even if you perfectly deliver on what you originally agreed, if your customer’s needs have changed during the project you’ll still deliver the ‘wrong’ outcome at the end of it. Keeping in regular contact with your customers means you will stay on top of these changes. It will keep your customer up-to-date with progress, manage their ongoing expectations and ensure you’re meeting their requirements – even if they change during the project.

Your customer will know if you’re experiencing any delays with the project which may mean they will be charged more, and you will know if they require any changes to the scope of the project, meaning your deliverables remain aligned with the customer’s expectations.

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