Dispute
A customer refusal or challenge to pay an invoice in part or full.
Why it matters
An open dispute can hold reserve, trigger a chargeback, or make additional invoices from the same customer ineligible. Disputes typically arise when a customer claims the goods or services were not delivered, were defective, or were priced incorrectly. The factoring agreement defines how disputes are handled: who is responsible for resolution, what documentation is required, and when a held invoice becomes a chargeback if unresolved. Sellers are generally responsible for managing customer disputes; the factor role is to withhold funding and reserve on affected invoices until the dispute closes.
How it appears in contracts
Dispute provisions appear in the Chargeback or Default section of the factoring agreement. Common language requires the seller to notify the factor within a defined number of days after a dispute is raised and to provide documentation supporting the invoice validity. If the dispute is not resolved within the recourse period, the factor may charge the invoice back to the seller, requiring repurchase or reserve deduction. Some agreements define a dispute threshold: minor deductions below a stated amount may be resolved through reserve adjustment without triggering a full chargeback process.
Related terms
Related reading
Sources
- International Factoring Association - International Factoring Association. Accessed 2026-05-19.
- Secured Finance Network - Secured Finance Network. Accessed 2026-05-19.