SECTION 1: SHORT TITLE: PURPOSE

Sections one to e, inclusive, shall be known as the “Massachusetts Fair Business Invoice Settlement Act.” It is the purpose of this chapter to establish fair deadlines for business to business invoice settlement based on the size of the payable and receivable business entities. Smaller businesses rely on prompt invoice settlement to ensure healthy cash flow and the ability to sustain business operations. Large business entities cannot expect smaller businesses or start ups to be able to operate on the same net payment schedule as their own. These chapters define the size of business entities and the fair time frame for invoice settlement based upon that size.

SECTION 2: DEFINITIONS

For the purpose of this chapter, the following words and terms shall have the following meanings:

“Large Business,” any company that does business in Massachusetts with more than 1000 employees and/or more than $50 million dollars in annual revenue.

“Small Business,” any company that does business in Massachusetts with fewer than 100 employees and/or an annual revenue of less than $5 million dollars.

“Start up,” any business that is headquartered in Massachusetts that has been in operation for less than five years based on the date of the business license first being issued.

“Invoice,” any ledger or statement of account upon which goods and/or services are itemized and a sum is calculated as a total amount due and a specified due date for payment.

“Purchase order,” any ledger itemizing goods or services, with an anticipated total amount due, being requested of a business entity by another business entity.

“Dispute,” any disagreement in an invoice by either the receivable or payable party in which the disagreement has been disclosed to all parties involved in the transaction.

“Settlement,” payment of an invoice in it’s entirety.

“Payment term,” the method of payment that is acceptable to pay an invoice. This should be specified on the invoice.

“Net ##” where ## is a whole number that indicates that the net amount of an invoice is due ## days after the date of the invoice. Ex: net 30 indicates an invoice must be paid in full 30 days after the date on the invoice.

SECTION 3: JURISDICTION

Nothing in the Massachusetts Fair Business Invoice Act, hereinafter referred to as the Act, shall apply to any course of conduct, pattern of activity, or activities unless they occur and have their competitive impact primarily and predominantly within the commonwealth.

For purposes of the Act, the burden of establishing jurisdiction shall be upon the party asserting such jurisdiction with respect to any course of conduct, pattern of activity, or activities relating to commerce in the Commonwealth.

Parties may decide to use the formal court system or enter into an arbitration agreement.

SECTION 4: PURCHASE ORDERS

All business transactions enforceable under this act must be initiated with a written purchase order by the business seeking to purchase goods or services. The purchase order must contain, at minimum, the following information:

•Contact details of the requesting business and selling business.

•Date the purchase order is signed or approved within the initiating organization including the legible name and signature of the approving authority.

•Itemization of goods or services being purchased.

•Date of receipt at the vending business as well as verification and approval of items ordered and total cost of the purchase order. Inaccurate purchase orders should be returned to the requesting organization for correction.

SECTION 5: INVOICES

An invoice is required by law whenever full payment is not being made to the vendor upon receipt of goods or services. The invoice should be provided by the seller to the buyer as soon as possible. The invoice must contain, at minimum, the following information:

•Contact details of the requesting business and selling business.

•Total amount due, payment term, and due date.

SECTION 6: MAXIMUM SETTLEMENT TIME FRAME

Any business entity that has a purchase order fulfilled will adhere to the following deadlines for settlement of the invoice based on the size of the business providing the goods or services:

•A small business must be paid in full within 30 days of the date on the invoice.

•A large business must be paid in full within 60 days of the date on the invoice.

•A start up business headquartered in the Commonwealth must be paid in full within 30 days of the date on the invoice.

SECTION 6: EXCEPTIONS

The only time the maximum settlement time frame can go beyond the requirements of section 6 is if both parties agree to a different net due date. The agreement should state the exception, circumstances around the exception, points of contact in each organization familiar with the agreement, and an expiration date for the agreement. If no expiration date is specified, the modification agreement becomes invalid after one year.

SECTION 7: DISPUTES

Any discrepancy relating to the amount due or received by the payee or vendor respectively must be reported to the other business party within 15 days of the date of the invoice. Investigations of disputes should be finished within 15 days that any party was notified by the other that there is a discrepancy. The time during an open dispute is the only time that no penalty will be assessed on unpaid balances, so long as an actual dispute exists. The seller forfeits any penalty that could be recovered if a dispute is unsuccessful in being proven against the buyer.

SECTION 8: PENALTY FOR UNPAID BALANCES

`For any business transaction that exceeds the maximum time frame for settlement, the following late fee shall be assessed to the buyers unpaid balance:

•Seven percent annualized interest per month on any unpaid balance.

In the event that the unpaid balance is due to a dishonored check, this penalty also applies to any relief payments provided under the law to the party that accepted the dishonored check.