Mastering conflicts: How to prevent and manage disputes

Disputes and complaints can happen to any business. Understanding how to resolve disputes can help business owners save time, reduce stress and avoid financial costs.

Below are 6 tips from the Victorian Small Business Commission to help small business owners prevent, de-escalate and resolve disputes themselves.

What are some examples of common disputes?

The most common disputes often relate to contracts, late payments from suppliers, faulty goods or services, and designs not meeting the requirements of the business.

Almost 50% of the disputes the VSBC assisted with during the financial year 2023–24 were related to unpaid money.

How to address disputes yourself?

You can take steps to resolve a dispute yourself, without having to involve a third party. Start by staying calm, communicating clearly and working towards finding a common ground. A dispute is a hassle for everyone involved, regardless of who is at fault.

1. Gather the facts

First up, you need to gather the facts. Collect all relevant information about the dispute. This may include records, dates, photos and any written agreements you have, including emails or invoices.

Find and highlight information with the greatest relevance to your dispute. It’s important to have key information and records easily available so that you can clearly communicate your concern to the other party and have evidence to support your claim.

Stay focused on the main issue that you need to resolve. It is common in disputes for people to raise additional issues, especially when tensions exist and emotions are raised.

While additional concerns may be relevant, including them at the same time as the main dispute may create a distraction and make it a lengthier process to find a solution. Prioritise and focus on key issues that need to be resolved.

2. Clarify what you hope to achieve

It’s important to be clear about what you hope to achieve when resolving a dispute. It might not always be possible for the other party in the dispute to give you what you want. Consider what compromises you’re willing to make.

As an example, you might have a supplier with an unpaid invoice that can only pay in instalments or a faulty product that needs to be repaired first instead of a refund. While neither of these options may be ideal, it may be better than no payments or a faulty product.

3. Raise your dispute in good faith

It’s important that you raise your dispute with the other party in the spirit of seeking a resolution. In raising the dispute, ensure that you’re clear about your concern and the solution that you’re proposing.

Also, consider the best way to raise the issue, including how the other party prefers to be contacted – do they respond well to phone calls, speaking in person, or emails?

Reaching out in the way they prefer can help pave the way for an amicable solution. It’s worth remembering that text messages are unlikely to be appropriate for these types of conversations as they can easily be misinterpreted.

Make sure you pick a time to raise your dispute that works for both you and the other party.

If for example they are busy, running late, stressed, or distracted by operating a vehicle or equipment, then they are unlikely to communicate as effectively, which may impact the dispute process.

When you do make contact with the other party, choose a time when you’re able to be seated in a quiet room without distractions.

Be empathetic to the person you’re raising the dispute with by thinking about it from their perspective. Stick to the facts and ensure you’re professional, fair and reasonable.

4. Record all communication in writing

It’s important to keep all communication with the other party of a dispute in writing.

If you speak with the other party in person or over the phone, follow up with an email summarising what was discussed.

This is important because it allows you to be clear about the matter you’re disputing and the solution you’re seeking. It also provides a record that you or the other party can reference in the event that you need to engage a third party to help resolve the dispute.

5. Issue a formal letter if discussion doesn’t work

If some time has passed and you are concerned that you aren’t making progress with the other party, you can escalate the matter by issuing a letter of demand.

For many businesses, this is the final action before seeking assistance from a professional third party.

For more information on letters of demand, visit the Victorian Small Business Commission’s page, Letter-of-demand.

For more information on unpaid money and following up, visit Business Victoria’s Manage overdue payments and debt recovery.

6. Alternative dispute resolution services are available

If you’re unable to reach an agreement or the business or organisation you’re in contact with is unresponsive, the Victorian Small Business Commission is here to help.

The Commission was established in 2003 to provide low-cost alternate dispute resolution services for small businesses.

The Commission helps small businesses resolve their disputes. Often this is in the best interest of both parties as it can save time and money by avoiding going to court.

To seek assistance, apply via the portal on the Victorian Small Business Commission website.

Victorian Small Business Commission application process

You’ll need to provide the details of the business or organisation you’re in dispute with, the key facts of the dispute and the resolution you’re seeking (think steps 1 and 2 of this article).

Our Dispute Resolution Officers (DROs) will contact you and the organisation you’re in dispute with to gather all information relevant to the dispute. Importantly, they’ll attempt to find a resolution that both parties can agree to. This is a free process, and more than 33% of disputes are resolved this way.

For more information on the mediation process, visit the Victorian Small Business Commission’s page, Guide to mediation.

Final tips on resolving disputes

Disputes can happen when 2 parties have different expectations. The good news is that by communicating as early and clearly as possible you’re equipping yourself with the best chance of a resolution.

While financial and operational pressures can impact the way you respond, take a step back and act with empathy and good faith.

Being willing to compromise may resolve the issue sooner.

It’s almost always a better commercial decision than continuing to dispute for protracted periods.

• For more information on retail lease disputes, visit, Retail lease and commercial disputes.
• For more information on managing supplier payments, visit, Manage payments to suppliers.