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Reducing payment delays at a ₹500Cr manufacturer

A worked example of an engagement: a two-day diagnostic, then four weeks to put the solution in place

All numbers on this page are illustrative

The problem
₹26Cr tied up in invoices with unresolved customer disputes
The solution
One owner for every dispute, quick settlement of small claims, and AI that prepares each case for review
Estimated impact
₹16Cr of working capital freed, and ₹2.5Cr a year in savings

The problem

  • Sales are up 18%, but cash is still tight
  • ₹26Cr is tied up in invoices that customers are disputing
  • They tried several fixes, including AI collections software. While more reminders went out, disputed invoices stayed unpaid until someone resolved the dispute
82 daysof sales sit in unpaid customer invoices
45 daysagreed payment terms
85 daysbefore the AI collections software

Diagnostic

Time taken: 2 days

Data reviewed
  • Unpaid invoices
  • The dispute register
  • 40 customer claims already accepted
Workflow mapping with
FounderAccountsSalesQualityDispatchOne customer's accounts team

What the diagnostic found across 7 systems

SystemWhat it does todayStatus
ERPHolds every invoice and who owes what. It shows when a customer paid less. The reason usually isn't recordedWorks
AI collections softwareSends 900 reminders a week, up from 150 phone calls. 1 in 5 goes out on an invoice the customer is disputingWorks, but annoys customers
Bank matchingMatches 94% of normal payments the same day. Payments with a deduction (1 in 3) end up in ExcelWorks for normal payments
Dispute register (Excel)412 open cases. Two people keep it. Last fully updated 19 days agoManual
Email and WhatsAppWhere the proof actually is: agreed prices, rejection reports, delivery receiptsManual
Price listSits in a sales Excel. Customer prices and their start dates aren't set up in the ERPBroken
Customer portalsBig customers post debit notes on their own supplier portals. Nobody checks them every weekBroken

Key issues delaying payment

412unresolved cases
40new cases each week
22settled each week
1
Nobody owns a case from start to finish

Accounts receives every claim and follows up with each department. Sales takes nine days to respond, on average. Meanwhile, the AI collections software keeps sending reminders on the disputed invoice.

DisputeWho has to act
Price differenceSales confirms the agreed rate and gets the customer's purchase order updated
Quality rejectionQuality checks the customer's report
Delivery differenceDispatch provides the delivery records
2
A small difference holds up a large payment

The disputes total ₹3.9Cr. The unpaid invoices linked to them total ₹26Cr. Some customers hold the entire invoice until a difference is fixed. Others pay the rest and deduct their claim.

One customer's accounts team: "We'll pay when the price is fixed on our PO. Reminders won't change that."
3
Small and large cases wait in the same queue

Every credit note waits for the finance head's weekly approval, whatever its size. Meanwhile, the money sits in a few places.

Cases (412)240 are under ₹10,000
240 small172
Disputed amount (₹3.9Cr)Small cases are 4%
₹3.7Cr in the other 172 cases
Disputed amount by kindTop 3 kinds are 78%. 20 customers hold 70%
PriceQualityPOOther 4
4
Claims get accepted without checks

Of 40 claims already accepted, 9 lacked supporting evidence: quality rejections nobody verified, and penalties with no contract clause behind them. They were worth ₹16.3 lakh of the ₹74 lakh checked.

All dispute types7 kinds, sorted by amount
Kind of disputeOpenAmountExampleWaiting on
Price difference after a revisionOpen84Amount₹1.38CrNew price agreed on email, but the customer's PO still has the old oneWaiting onSales
Quality rejectionOpen60Amount₹1.06CrCustomer rejects 300 of 5,000 parts and raises a debit noteWaiting onQuality
Invoice doesn't match the POOpen49Amount₹61LWrong PO number or quantity on the invoiceWaiting onSales
Short supplyOpen53Amount₹32LInvoice says 1,200 units, the customer received 1,150Waiting onDispatch
Late delivery penaltyOpen24Amount₹28L2% deducted for a shipment that arrived 4 days lateWaiting onSales
Freight or packing chargesOpen69Amount₹12LCustomer refuses a ₹1,800 freight chargeWaiting onSales
Short payment, no reason givenOpen73Amount₹13LA round amount paid with no noteWaiting onAccounts

The solution

Stop unnecessary workSimplifySimple rulesThen AI

What changes, week by week

Week 1
  • Settle small claims quickly
  • One owner per dispute
  • Call the top 20 customers
  • Pause reminders on disputes
  • AI prepares the backlog
Week 2
  • Customer prices in the ERP
  • Freight and TDS checked by rule
  • AI drafts every new reply
Weeks 3 and 4
  • Team works from one daily list
  • Fix misses, then hand over

A person checks every AI draft before anything goes out

MeasureTodayTarget
Cases settled a weekToday22TargetMore than 40 by week 4, so the backlog stops growing
Open casesToday412TargetUnder 110 by week 4
Days of sales unpaidToday82Target70 by week 8, checked against actual receipts

The ERP and the AI collections software stay in place

Before and after

Week 0Open cases 196
Invoices pass through chasing, disputes and matching. Disputes pile up before the solution and clear after it.

What the team sees each day

Disputes · this morningFinance head
9need your decision
14waiting on sales
3past the deadline
Price difference on a ₹12.7 lakh invoice₹24,000 Next: sales gets the customer's PO updated Owner: SalesPrice email attachedCustomer PO attachedOpen case
ProofPrice email from 12 August agrees ₹212 a unit. The customer's PO still says ₹208. 6,000 units × ₹4 = ₹24,000
Next stepSales asks the customer to update the PO. Due Friday
DecisionWithin the key accounts manager's ₹50,000 limit. Once the PO is updated, the full ₹12.7 lakh goes into the customer's next payment run
Quality rejection of 300 parts₹4.2 lakh Next: quality checks the rejection report Owner: QualityRejection report attachedPast deadline
Delivery shortfall of 50 units₹1.6 lakh Next: dispatch checks the delivery receipt Owner: DispatchTransporter receipt attached

Tap the first case to open it

Estimated impact

Working capital freed, one-time ₹16Cr

Customers pay 12 days sooner

Savings every year ₹2.5Cr

₹1.7Cr in interest and ₹86 lakh in claims that shouldn't be paid

For your business

Every engagement starts with the two-day diagnostic. You get the main bottleneck, what fixing it is worth, and a plan with clear responsibilities.

Book 30 minutes