A disputed payment clause says the customer doesn’t have to pay fees “subject to a bona fide dispute.” Or maybe the main payment clause simply says, “Customer shall pay all undisputed fees on or before ___.” Either version creates two problems.

1. If you let the customer delay until the end of the dispute, you lose the time value of the money. (That one does have a solution: “Interest on late payment will accrue from the original due-date, regardless of the dispute, and will be due at the time of payment (if any).”)

2. The clause takes the pressure off the customer. You don’t want them to dispute a payment, so why make it risk-free? You’re better off if the customer has to worry that you’ll terminate or take some other unpleasant action, right? After all, you’ll be worried about not getting paid. Why should you worry alone? And the dispute will get resolved faster if both parties feel the pressure.

Maybe you’ll have to give disputed payment terms to some customers who (a) think of it and (b) demand it. But that’s no reason to put it in your standard terms.

Let’s face it, the customer usually won’t pay a disputed fee, even without the clause. So you don’t need to offer it. Don’t make it so easy to hold back your money.

Our first Master Class covers this topic in greater depth, but enrolling in the entire 4-course series will provide the most value (in both learning and price): https://lnkd.in/gt2gD-eV

by David Tollen