Legal invoice payment terms: what you can set and refuse

The legal invoice payment terms for a trades business are simpler than most main contractors would like you to believe. In Sweden, under section 2 a of räntelagen (the Interest Act), a business customer must pay within 30 days of receiving your invoice, and that period may only be extended if the customer has expressly agreed to a longer term. If the customer is a public authority, 30 days is a hard ceiling that cannot be extended at all. Silence is not agreement: a 60- or 90-day term buried in a supplier portal, an unsigned purchase order or a set of “standard conditions” you were never asked to accept does not bind you. The UK has the mirror-image rule in the Late Payment of Commercial Debts (Interest) Act 1998 — 30 days by default, and anything past 60 days void unless it is not grossly unfair to you.

The 30-day default: where the clock actually starts

Two dates matter, and they are not the same date.

• The due date. Under räntelagen 2 a §, payment for goods or services supplied in business falls due 30 days after you have made your claim — in practice, 30 days from when the customer received the invoice.
• The interest date. Under räntelagen 3 §, late-payment interest starts running 30 days after you sent the invoice or demand, even if you never printed a due date on it.

So an invoice with no terms on it is not a favour to the customer. It is a 30-day invoice with interest running from day 31. What you need is proof of the date it went out and the date it arrived. And the clock does not wait for the customer to be ready: not for their finance department, not for the first of next month, and not for their own client to pay them.

Legal invoice payment terms for business customers: the 30-day cap

This is the part subcontractors are rarely told. For business-to-business trade, 30 days is not just the fallback. It is the maximum unless you actively agree otherwise. “Expressly agreed” (uttryckligen godkänt) means what it sounds like:

• A term you signed, initialled or accepted in writing after being shown it: usually binding.
• A term in general conditions attached to and referenced in a contract you signed: usually binding, if reasonably visible.
• A term that first appeared on the back of a purchase order, in a portal you had to use to invoice, or in a policy email sent after the job started: usually not expressly agreed.
• A term you objected to in writing and they ignored: not agreed.

And when the debtor is a public authority — a municipality, a region, a state agency — 30 days is the limit full stop. They cannot ask you for 60, and you cannot validly give it to them. If a council's framework agreement says 60 days, that clause is unenforceable against you.

Outside Sweden the shape is the same but the numbers differ. In the UK, terms over 60 days are void unless not grossly unfair. In New Zealand and Australia there is no equivalent statutory cap, so your only protection is contractual: fix the term in writing before you start.

Why a main contractor's long approval period is often unenforceable

The most common way a large contractor reaches 90 days without ever writing “90 days” is the approval period. Invoices are logged, reviewed by the site manager, approved at the monthly valuation, and only then does the 30-day term start. Six weeks of process, then a 30-day term, and you are the bank.

This does not work, and the law says so directly. Räntelagen 2 a § provides that where a procedure for approval or verification of the goods or services is used, that procedure may not run for more than 30 days from receipt of the work — unless something else has been expressly agreed and the arrangement is not grossly unfair to you as the creditor. The same rule sits in Article 3 of the EU Late Payment Directive (2011/7/EU), which is why the UK has the identical carve-out.

The practical effect is large: the approval period and the payment period cannot simply be stacked to a number the contractor likes. Two more things kill long approval periods:

• Nothing to approve. An approval period exists to check the work. Once the work has been inspected, signed off on an egenkontroll (self-inspection protocol), or handed over, the reason for the delay is gone. A contractor who has already accepted the work and is still “approving” the invoice is administering, not verifying.
• Standard construction terms are shorter than the contractor's own paperwork. Under AB 04 and ABT 06, the standard general conditions for Swedish construction and design-build contracts, payment is due within 30 days of the client receiving the invoice. If the head contract runs on AB 04 and the subcontract imposes 90 days downstream, ask why.

What the law does not do: it does not stop a contractor arguing the work is defective, the quantities are wrong, or the ÄTA (variation) was never ordered. Those are real disputes, and the answer is documentation, not statute. What it stops is a healthy, undisputed invoice sitting in a queue for a quarter.

What you are entitled to when they pay late

You do not have to ask nicely for these. They accrue automatically once the invoice is late.

The SEK 450 is the one people leave on the table. It is a flat statutory sum per late invoice, needs no proof of loss, and cannot be contracted away in advance. On twenty late invoices a year that is real money, and it is also a signal: a contractor whose finance system absorbs an automatic charge every time they sit on you tends to find your invoices faster. The UK equivalent is 8% over the Bank of England base rate plus a fixed sum of £40, £70 or £100 by debt size, plus reasonable recovery costs above that.

Stop financing the job: à conto and staged invoicing

Even perfect payment terms will not save you if you only invoice once, at the end. On a ten-week job with a 30-day term, a single final invoice means you carry materials, wages and social charges for roughly three months. That is not a payment-terms problem. It is an invoicing-design problem, and it is entirely inside your control. Two tools:

• À conto invoicing. Interim payments on account, usually monthly, against work carried out. Each à conto invoice is a real invoice: its own due date, its own 30 days, its own right to interest and the SEK 450. The final invoice (slutfaktura) settles the balance.
• A payment plan (betalningsplan). Fixed sums tied to milestones — first fix complete, board energised, second fix, handover — rather than to a percentage someone has to assess. Milestones you can photograph are milestones you can invoice.

A staged structure that holds up:

1. Write it into the quote, not the contract negotiation. If they accept the quote, they accept the payment plan.
2. Tie each stage to an observable event. “On delivery of the switchgear to site” beats “at 30% completion”. One is a fact; the other is an argument.
3. Never let materials sit on your balance sheet. Front-load the first stage to cover the material order. Buying cable and cabinets on your own credit for a customer on 60 days is the fastest way for a profitable firm to run out of cash.
4. Invoice the ÄTA the week it happens. Variations bundled into the final invoice are the ones that get argued about, because the person who ordered them has moved to another site.
5. Send the invoice the day the stage completes. Every day you sit on it is a day of your own 30 you gave away.

This is where a job system earns its keep. In OdinTask the payment plan lives on the quote the customer signed, each stage becomes an invoice from the job card when the stage closes, ÄTA is registered while the technician is still in the building, and invoices sync to Fortnox or Visma so nothing is retyped. The point is not the software — it is that staged invoicing only works if raising an invoice takes two minutes rather than an evening.

Consumers are a different rulebook

Everything above is business-to-business. Against a private customer in Sweden, konsumenttjänstlagen governs: the consumer pays when you demand payment, but not before the work is performed. There is no statutory 30-day cap protecting you, and you get 3 years rather than 10 to pursue the claim. Your protection is the contract and the deposit, not the statute. Use Hantverkarformuläret 17 — the standard consumer trades contract agreed between Konsumentverket and the industry bodies — or your own written quote with a payment plan on it, and agree the stages before you lift a tool.

The clauses to strike before you sign a subcontract

Read the payment section first. These are the ones that cost money:

• Pay-when-paid. “We pay you when the client pays us.” You are not a party to that contract and their client's cash flow is not your risk. In UK construction it is banned outright by the Housing Grants, Construction and Regeneration Act 1996 except on upstream insolvency. In Sweden, argue it under 36 § avtalslagen and avtalsvillkorslagen — better still, delete it.
• Invoicing windows. “Invoices received after the 25th are processed the following month.” A payment-term extension with a friendly name, and it runs straight into the approval-period rule.
• Portal-only invoicing. Fine in itself, but insist the receipt date is the upload date, not the approval date.
• Retention with no release date. Retention is normal. Retention with no defined release trigger is a loan.
• Set-off across contracts. Lets them hold your money on site B over a dispute on site A.

You will not win every one of these. Win the first two.

If they still do not pay

The undisputed invoice has a cheap route. In Sweden, a betalningsföreläggande (payment order) to Kronofogden costs a modest application fee, is a form rather than a lawsuit, and produces an enforceable decision if the debtor does not object. It works precisely because most late payers do not dispute the debt — they are managing their own cash flow with yours. Check the current fees at kronofogden.se before you file.

Sequence it: due date passes, reminder with interest and the SEK 450 stated on it, then a collection demand, then the payment order. Do it on a schedule, not on a mood — and on the second late invoice, not the twelfth. By the twelfth you are their cheapest source of credit and they know it.

One last thing that costs nothing: put the interest and the late-payment compensation on the invoice from day one, as terms rather than as a threat. Most finance departments sort their payment run by consequence.

And if your invoices go out late because raising them is a job in itself, fix that first. Start a free 14-day trial of OdinTask to see the quote, the payment plan and the invoice as one thread, or read the rest of the blog for the workflows behind it.

This article is general information for trades businesses, not legal advice. For a specific contract or dispute, take advice from a lawyer or your trade association.