Glossary · Invoices and billing
Short payment
Also called Underpayment
A short payment is when a customer pays less than the invoiced amount, often because of a deduction, a dispute or bank charges.
Short payments are partial payments the supplier never agreed to. Common causes are a disputed line, a deduction the customer took for a late delivery or missing paperwork, a withholding tax, or international bank fees taken out of the transfer.
Small short payments are easy to ignore and expensive in aggregate. Set a tolerance — the amount below which you write the difference off — and chase anything above it with a specific question: which line did you not pay, and why?
On cross-border invoices, state that bank charges are for the payer (“OUR” in SWIFT terms) to stop fees being deducted from what you receive.
Example
A $5,000 invoice arrives as $4,975 after a correspondent bank fee. The supplier writes off the $25 under its tolerance, but raises a separate $400 short payment on another invoice with the customer.