Five layers people collapse into one field
Every one of these can disagree with the others legitimately. A sent invoice can have a completed payment that has not cleared. A paid-in-your-CRM invoice can be an uncleared cheque. Reporting is only trustworthy when the report says which layer it is describing.
- Invoice status — where the document is: draft, issued, sent, cancelled.
- Receivable state — where the balance is: current, overdue, partially paid, disputed, closed.
- Payment status — where a specific payment is: pending, completed, failed, refunded.
- Accounting status — how your books treat it, which your accountant owns.
- Cash — whether the money is actually available in your bank.
Disputed is a state, not an excuse to stop counting
When a customer contests scope, quality or amount, the honest move is to record the dispute, the date, what is contested, and who owns resolving it — and keep the balance visible. Removing a disputed invoice from AR makes the aging report look healthier while your exposure is unchanged.
The resolution is either evidence (approved scope, signed change order, completion documentation), a credit or adjustment for the contested portion, or a write-off. Each of those is a recorded event with an owner.
What written off should mean
- A named person decided the balance will not be collected.
- There is a reason on the record, not just a status change.
- The invoice and its history survive; only the expectation of payment ends.
- The threshold and approval level for write-offs is agreed in advance.
- Accounting treatment of the write-off is a question for your accountant.