Invoice dispute question (pricing)
Discussion
In one of my roles here at work involves credit control.
Currently got an interesting scenario and would like to know the proper legal position.
A customer sent a purchase order in July for some product where I work. The price for the goods changed (went up of course) and I believe was mentioned over the telephone (not by me, I'm not in sales).
Moving along to this month, after failed attempts to get a payment date for the invoice a LBA (letter before action) was issued on Tusday morning. Also on Tuesday afternoon (before the LBA was received by the customer) a call was received informing me that there was never authorisation for the higher price (an amended Purchase Order was not sent by the customer). The customer offered to pay the previous price they had for the goods (in 2005, around 30% less!).
On passing this through to a director I was told that the goods would be collected from the customer. I informed the customer this and they said they would "check". They have not got back. I have called this morning and told the person would get back to me.
Bottom line is I believe the goods have been used / consumed. Hence I think they should not have done this as doing so to me accepted the invoice. If they did not like the price then this should have been mentioned as soon as the invoice was received and then the goods could have been collected then.
Anyone know the official line on this?
Currently got an interesting scenario and would like to know the proper legal position.
A customer sent a purchase order in July for some product where I work. The price for the goods changed (went up of course) and I believe was mentioned over the telephone (not by me, I'm not in sales).
Moving along to this month, after failed attempts to get a payment date for the invoice a LBA (letter before action) was issued on Tusday morning. Also on Tuesday afternoon (before the LBA was received by the customer) a call was received informing me that there was never authorisation for the higher price (an amended Purchase Order was not sent by the customer). The customer offered to pay the previous price they had for the goods (in 2005, around 30% less!).
On passing this through to a director I was told that the goods would be collected from the customer. I informed the customer this and they said they would "check". They have not got back. I have called this morning and told the person would get back to me.
Bottom line is I believe the goods have been used / consumed. Hence I think they should not have done this as doing so to me accepted the invoice. If they did not like the price then this should have been mentioned as soon as the invoice was received and then the goods could have been collected then.
Anyone know the official line on this?
Not sure of the exact legal position but I think you’re on pretty shaky ground here.
You should have insisted on an amended PO (or at least written acceptance of the higher pricing) before you shipped the product.
Did you send a PO confirmation, at the higher price? We used to use a ‘last piece of paper’ principle, so if the last exchange before shipment was our confirmation then that’s what stood (otherwise simply accepting the customers PO can be taken to mean that you’re carte blanche accepting their terms and conditions).
I don’t think the ‘they should have noticed the invoice price was different’ argument would hold water. Do you send invoices with the goods – usually they’re sent separately? Even if you do then the product and the invoice would part company at goods inwards and the product could have been used quickly before it was realised the invoice was different.
You should have insisted on an amended PO (or at least written acceptance of the higher pricing) before you shipped the product.
Did you send a PO confirmation, at the higher price? We used to use a ‘last piece of paper’ principle, so if the last exchange before shipment was our confirmation then that’s what stood (otherwise simply accepting the customers PO can be taken to mean that you’re carte blanche accepting their terms and conditions).
I don’t think the ‘they should have noticed the invoice price was different’ argument would hold water. Do you send invoices with the goods – usually they’re sent separately? Even if you do then the product and the invoice would part company at goods inwards and the product could have been used quickly before it was realised the invoice was different.
Do you have values on your GRNs?
If they receipted the goods at the higher price then surely this is taken as acceptance of the new price? If they weren't happy with the price then, then they should have fired the goods back.
Otherwise, unless you specifically stated at negotiation stage that prices were liable to rise you could be on a sticky wicket.
If they receipted the goods at the higher price then surely this is taken as acceptance of the new price? If they weren't happy with the price then, then they should have fired the goods back.
Otherwise, unless you specifically stated at negotiation stage that prices were liable to rise you could be on a sticky wicket.
I’d consider the price mentioned for goods to be final at the time the sale was agreed unless it was made explicitly clear the price would change. However if the product available had changed (from what I first viewed) and there was a new price attached with an invoice making this clear I would consider it a “take it or leave it” scenario. However in the latter scenario I be inclined to be intensely annoyed at not getting what I agreed to pay for.
I usually insist on at least a 50/50 split where at least 50% of the price (which usually covers the cost price of the goods sold) is paid prior to delivery date and the other 50% on delivery at the latest.
I usually insist on at least a 50/50 split where at least 50% of the price (which usually covers the cost price of the goods sold) is paid prior to delivery date and the other 50% on delivery at the latest.
jamesuk28 said:
Don't have a snowballs chance in hell mate. If we got this through as a debt recovery job we would turn it down. Should have made it crystal clear the price had increased. You will get crucified in court let it go.
Considering the amount "in dispute" (i.e. the price difference) is £30 so don't think it will ever get that far, but I was just interested as to the actual legal element. There is generally a good relationship with all customers, but occasionally one turns up like this one.
Any price changes are always passed to the customer and generally agreed verbally. On this particular one I do not have a record of who this was with, but is interesting that the weight of the customers purchase order seems to have.
Edited by RichardD on Friday 13th October 08:33
Yep, the consensus is pretty much in line with how I would do it.
If I, or any of my delegated peeps, got invoice charging a different (higher, never lower, well almost
) price to that in the PO, simple result >>>
it right back.
You'd be on loser with me I'm afraid.
Take your 2005 style payment and get your admin sorted pdq.
If I, or any of my delegated peeps, got invoice charging a different (higher, never lower, well almost
) price to that in the PO, simple result >>> it right back. You'd be on loser with me I'm afraid.
Take your 2005 style payment and get your admin sorted pdq.
BigAlinEmbra said:
Do you have values on your GRNs?
If they receipted the goods at the higher price then surely this is taken as acceptance of the new price? If they weren't happy with the price then, then they should have fired the goods back.
Otherwise, unless you specifically stated at negotiation stage that prices were liable to rise you could be on a sticky wicket.
If they receipted the goods at the higher price then surely this is taken as acceptance of the new price? If they weren't happy with the price then, then they should have fired the goods back.
Otherwise, unless you specifically stated at negotiation stage that prices were liable to rise you could be on a sticky wicket.
There are two things that seem out of order from the customer end to me.
The invoice would have arrived a day or two after the goods. The delivery note doesn't have any financial values on it.
Annoyance 1 = Taking just under three months to bring this to light. This is just lazy / unprofessional / devious / plain numptiness.
Annoyance 2 = They have now gone to ground on the request to collect the goods. Obviously this is down to annoyance 1 above. If they had telephoned within a week or so of getting the goods saying that they'd matched the invoice with their PO and it was now in query, it could have been dealt with simply.
Thanks everyone for the posts, its just been out of interest - the director who did the order seems more interested in looking for a new racehorse to buy on the WWW than the fate of the £30 here, but I will warn the sales staff to make sure that any price clarifications are recorded just in case !
Vanya said:
...
If I, or any of my delegated peeps, got invoice charging a different (higher, never lower, well almost) price to that in the PO, simple result >>>
it right back.
If I, or any of my delegated peeps, got invoice charging a different (higher, never lower, well almost
) price to that in the PO, simple result >>> it right back. What you are saying you would do are efficient professional actions. Would have been straightforward if our customer had done this promptly rather than after 11 weeks
I've wanted to implement an amazon type email pdf confirmation system as the IT is my thing, credit control is just an annoyance that compromises PH reading
RichardD said:
I've wanted to implement an amazon type email pdf confirmation system as the IT is my thing, credit control is just an annoyance that compromises PH reading
Sorry buddy but it doesn't change who the obligations lie with.
That said, your confirmation system is a great concept and it will probably improve things.
Your company will still need to smarten it's admin procedures.
Good luck.
I had a feeling that might annoy some of the people who took time out to give advice. I'm not really sure of your time line here, but let's see if this is right:
your customer ordered parts from a 2005 catalogue;
your company delivered and invoiced for those parts at current pricing levels;
customer disputes invoice.
First off, this is not strictly a non-payment but rather a disputed invoice. Don't go the road of legal action yet - rather try to come to an agreement with your customer.
From a legal point of view, your standard terms should state something along the lines of prices being subject to change without prior notification and quotes being good for X days. You are entitled to change your prices and charge more.
Your catalogue isn't an offer, but an 'invitation to treat'. When your customer places the order, he is in fact making the offer to purchase. Just what price you are both agreeing to depends on what is said at the time.
You're right to insist on improving your sales practices because this is where such disputes can be stopped before they're even started.
My own suggestion would be to have your sales manager contact the customer and reach an agreement over a price, then issue a credit note and new invoice. More than losing money on what seems to be one small sale, you are engendering very poor customer relations.
Take the hit for £30 and make your customer feel better about this mess.
your customer ordered parts from a 2005 catalogue;
your company delivered and invoiced for those parts at current pricing levels;
customer disputes invoice.
First off, this is not strictly a non-payment but rather a disputed invoice. Don't go the road of legal action yet - rather try to come to an agreement with your customer.
From a legal point of view, your standard terms should state something along the lines of prices being subject to change without prior notification and quotes being good for X days. You are entitled to change your prices and charge more.
Your catalogue isn't an offer, but an 'invitation to treat'. When your customer places the order, he is in fact making the offer to purchase. Just what price you are both agreeing to depends on what is said at the time.
You're right to insist on improving your sales practices because this is where such disputes can be stopped before they're even started.
My own suggestion would be to have your sales manager contact the customer and reach an agreement over a price, then issue a credit note and new invoice. More than losing money on what seems to be one small sale, you are engendering very poor customer relations.
Take the hit for £30 and make your customer feel better about this mess.
deva link said:
RichardD said:
the amount "in dispute" (i.e. the price difference) is £30
Give me strength.
If what happened happened on this particular example then it could happen on a larger one - its the principal, not the amount.
How many people on PH moan about "speeding" fines, they are small amounts of money too
J1mmyD said:
I'm not really sure of your time line here, but let's see if this is right:
...
...
Thanks for that, there was / is no catalogue, the customer assumed the price was the same as they last paid! As far as I know the price change WAS confirmed with the customer by one of the sales staff, but I do not know it 100%. Hence nothing has happened differently to what happens with hundreds of other customers, just that one has decided to try it on as an official order was not amended, even though from the responses here it would seem that this is what the law favours !
Is amazing on how something so theoretically simple as an act of purchasing can get so complex!
RichardD said:
Is amazing on how something so theoretically simple as an act of purchasing can get so complex!
It can be, but once you understand what's going on it's quite simple.
The example I was given years ago is a supermarket purchase:
you pick up a tin of beans from the shelf of your supermarket marked at 19p (how much is a tin of beans these days?). You take it to the checkout where the barcode is scanned. A price comes up on the til, you pay, take your beans and leave.
Now, here's what's actually happening:
1) the display of beans is an 'invitation to treat'. The displayed price isn't a contractual price but rather an advertisement inducing the potential customer into making a contract to purchase the beans.
2) when you take the beans to the checkout, you make an offer to purchase the beans at the advertised price.
3) the beans are scanned and the price is confirmed. This is the acceptance of your offer and an agreement to purchase the beans is made.
4) the payment for the beans is made and you take possession of the beans completing the contract.
Now, imagine that when the beans are scanned the till says they are worth 22p, not 19p. You can either accept that price or haggle and offer the 19p that was advertised. You can decide to reject the beans at 22p, if that is your preference, or you can decide to accept that as the agreed price. But, wouldn't you be just a little bit pissed off that the advertised price is different to the actual price that the supermarket is asking? Disregarding any advertising standards legislation, this is why the supermarket will often agree to sell the item at a lower price when such errors occur. This is basically the position you are in now ... you have to decide whether or not to accept the lower price or take further action, risking losing further custom from this client (as well as all his friends).
Hope that simplified example has helped a little.
Gassing Station | Business | Top of Page | What's New | My Stuff