A customer disputes an invoice: reconcile delivery, billing and payment before chasing

A RMB 16 million order with an unresolved quantity difference

Assume a business in mainland China sells 10,000 units of one product under a contract at a tax-inclusive RMB 1,600 per unit. With no freight, discount or other items, the contract price is RMB 16 million. The seller issued an invoice for RMB 16 million and has confirmed a bank receipt of RMB 12 million allocated to this transaction. The book balance still open is RMB 4 million.

The seller's dispatch record lists 10,000 units, while the customer's warehouse record currently lists 9,800. There is a 200-unit difference. The customer disputes the bill and is holding the remaining payment. The parties have not established whether the 200 units were short-delivered, received later or affected by another issue.

At the example's single contract price, 200 × RMB 1,600 is RMB 320,000, or RMB 0.32 million. This is a reference for tracing the difference; it is not an agreed credit, compensation or invoice adjustment. If the parties later establish and agree that only RMB 0.32 million should be adjusted, and nothing else changes, RMB 4 million less RMB 0.32 million would leave RMB 3.68 million outstanding. Before that confirmation, do not describe RMB 3.68 million as a customer-approved balance.

Reconstruct the evidence in transaction order

• Contract and order: Match the contract, order, price, quantities, delivery, acceptance and payment clauses. Which entities agreed to what amount and conditions?
• Dispatch and transport: Match picking, warehouse release, carrier handover and tracking records. What was dispatched, in which batches and by whom?
• Receipt and acceptance: Check customer warehouse receipts, signatures, acceptance, exceptions and later-receipt records. What was received and challenged? Is a signature the acceptance required by this contract?
• Invoicing and payment: Link the original invoice, any proper subsequent changes, payment notice and bank receipt. Which transactions does the invoice cover, and where was the RMB 12 million applied?
• Communications: Keep the customer objection, investigation, missing documents and written responses. What exactly is disputed, who owns the next step and when is it due?

Check the entity names, order number, product, units, currency and dates. One bank payment may cover several orders, and one invoice may cover several deliveries. Keep an allocation basis; matching totals alone do not prove a one-to-one relationship. Do not apply the same receipt twice.

Distinguish a document from an agreed fact

In this example, a dispatch note for 10,000 units does not by itself prove the customer accepted 10,000. A preliminary warehouse record for 9,800 does not by itself prove the seller short-delivered. Review carrier handovers, split shipments, damage, later receipts and returns, together with records both parties have signed or otherwise acknowledged. Mark conflicting and unconfirmed facts explicitly.

Ask whether the customer disputes only the 200 units, or also acceptance, price, other orders or a payment condition. Do not label the remainder “undisputed” until the customer has actually clarified its position.

China's Civil Code includes provisions on inspection in sales contracts. Actual rights, notice periods and remedies depend on the contract, facts and applicable provisions. Assign a qualified person to time-sensitive or escalating disputes; do not infer a universal deadline from a checklist.

Handle invoices and tax according to the real transaction

An invoice matching the contract total does not prove that the quantity dispute is resolved. Equally, do not issue a red-letter invoice or alter an entry simply to make two reports match before the facts are established. If an actual return, price allowance or invoicing error is later confirmed, finance should determine the applicable invoice and filing treatment and retain the supporting evidence and receipts.

China's invoice implementation rules address red-letter electronic invoices for situations including sales returns. A quantity difference alone does not determine whether an adjustment is required or which filing period it affects.

Record the next action before closing the issue

Keep the transaction and disputed amount, facts confirmed by each party, missing or contradictory evidence, customer contact, internal owner, agreed response date and subsequent payment or decision. Preserve the original documents and earlier conclusions when new evidence changes the assessment. Once a payment actually arrives, update the open balance using its confirmed allocation.

For prioritising an entire ledger, see which overdue receivables to follow up first. For matching bank receipts to business records, see receivables and bank reconciliation.

CaiGeek is an AI financial assistant for small and medium-sized businesses. A useful request is: “Organise this order's contract, receipt, invoices and payments; identify confirmed facts, contradictions and missing evidence.” Business and finance staff verify the facts; appropriately responsible people decide legal or tax matters. Contact CaiGeek for current product and service arrangements.