When a foreign client pays late, the commercial problem is cash flow; the compliance problem is the clock. For services, the full export value must be realised within 9 months from the invoice date, so a client who drifts from 30 days to six months has quietly used up most of your window. The fix is a written follow-up trail from the first missed due date, and an extension request to your AD bank before the 9 months run out, not after.
Key takeaways
- The 9-month period runs from the invoice date, not the due date. Rupee invoices get 12 months.
- Late payment is not a breach of FEMA by itself, but an unrealised entry past the deadline needs explaining to your bank.
- Build a written trail: reminders, client replies, revised promises. That trail is your evidence for an extension.
- Ask your AD bank for an extension before the deadline, with reasons and documents.
- Prevention beats cure: advances, milestones and clear late-payment terms shorten the gap.
How the clock works
Your EDF declares the invoice; the bank enters it into EDPMS; the entry stays open until the money is realised. For services, the Regulations allow 9 months from the invoice date for foreign currency invoices, and 12 months where the invoice is in Indian rupees. The AD bank can extend the period on a reasoned request.
A 60-day payment term therefore leaves you seven months of buffer. A client who ignores two reminders and then goes silent for a quarter can eat through that faster than you expect. Our glossary entry on the realisation period explains the concept.
A month-by-month plan for an overdue invoice
| Time from invoice | What to do | What to keep |
|---|---|---|
| Due date passes (say month 1–2) | Polite reminder with invoice attached | Sent email |
| Two weeks later | Second reminder; ask for an expected payment date | Client reply, if any |
| Month 3 | Call or escalate to a senior contact; confirm the amount is undisputed | Call notes, follow-up email summarising the call |
| Month 4–5 | Ask for a written payment plan; consider pausing further work | Payment plan email |
| Month 6 | Decide: is payment likely before month 9? | Internal note |
| Month 7–8 | If not, write to your AD bank for an extension, with the trail | Extension request and bank's reply |
| Month 9 | Deadline; should be covered by extension or realised | Bank acknowledgement |
Do not wait for month 9 to make the decision. Banks see many last-day requests; a request in month seven with a clear history reads very differently from a panicked one on the deadline.
Writing reminders that also work as evidence
Your reminders have two jobs: getting paid, and proving later that you chased. Keep them short and factual.
Subject: Invoice GL/26/118 – USD 22,000 – overdue since 13 January 2027
Hi Daniel,
A quick reminder that invoice GL/26/118 dated 14 November 2026 for USD 22,000 was due on 13 January 2027 and remains unpaid. I have attached a copy.
Could you let me know the expected payment date? If anything in the invoice needs clarifying, I'm happy to help.
Regards, Priya
For more variations, see our article on invoice reminder emails that get you paid.
A worked example
Copperleaf Studios LLP, an animation studio in Hyderabad, invoiced a Los Angeles production house USD 22,000 on 14 November 2026 for a series of explainer animations, with 60-day terms. The invoice was on Copperleaf's November EDF.
- 13 January 2027: due date passes. First reminder sent.
- February: the client replies that a funding round has been delayed and promises payment in April.
- April: nothing arrives. Copperleaf's partner calls the client's finance head and follows up with an email recording a new promise: half in May, half by the end of September.
- 20 May: USD 11,000 arrives. Copperleaf gives its bank the invoice, FIRA and a matching instruction showing a part-realisation against the invoice.
- 1 July: with the deadline of 14 August 2027 approaching and the balance promised only by late September, Copperleaf writes to its AD bank requesting an extension to 31 October 2027. It attaches the invoice, the full email trail, the part-payment evidence and the client's written payment plan.
The bank considers the request on its merits. Whatever the outcome, Copperleaf has done what it can: chased in writing, recorded promises, realised part, and asked before the deadline. The invoice was above ₹10 lakh, so the declaration route was not available for it.
What to put in an extension request
| Element | Example |
|---|---|
| Invoice details | GL/26/118, 14 Nov 2026, USD 22,000 |
| EDF month | November 2026 |
| Amount realised so far | USD 11,000 on 20 May 2027 |
| Amount outstanding | USD 11,000 |
| Reason for delay | Client's funding delay; written payment plan received |
| Steps taken | Reminders on these dates; call on this date |
| Extension sought | Up to 31 October 2027 |
| Attachments | Invoice, reminders, client replies, payment plan, FIRA for the part-payment |
Our free realisation extension request letter has this structure ready. For the bank's side of the process, read our guide on how to request an extension of the realisation period.
When the client may never pay
Some clients go out of business or vanish. If you conclude that money will not come, keep chasing in writing while you talk to your bank and CA about how to treat the unrealised amount under the current RBI rules. An open EDPMS entry with no explanation is the worst outcome; an entry with a documented history and a bank-approved treatment is manageable. This is general information, not legal or tax advice.
Preventing the problem
You cannot control a client's cash flow, but you can shape your exposure:
- Advances. Ask for a percentage upfront, especially from new clients. For services other than software, the EDF can be filed on or before the date payment is received.
- Milestones. Smaller, more frequent invoices limit how much is at risk at once.
- Late-payment terms. A clear clause on interest or suspension of work gives you leverage.
- Credit checks. For large contracts, a little research on the client before signing is worth it.
- Clean invoices. Clients delay invoices that are wrong. Our free export invoice generator helps you get the details right the first time.
Frequently asked questions
Does the 9-month period start from the invoice date or the due date?
From the invoice date. For services, the full value must be realised within 9 months of the invoice date, or 12 months for invoices in Indian rupees. Payment terms do not move the start of the clock.
Can my bank extend the realisation period?
Yes. The AD bank can extend the period on a reasoned request. Ask before the deadline, explain why payment is delayed and what you have done to recover it, and attach supporting documents.
What happens if I miss the 9-month deadline without an extension?
The EDPMS entry stays open past its due date, which your bank will need to follow up. It can also hold up related documents such as eBRCs and complicate GST refund claims. Write to your bank as soon as you realise, explain the delay and ask how to regularise it.
Is a part-payment enough to keep the invoice in order?
A part-payment reduces the outstanding amount but does not close the entry. Give your bank matching instructions for the part received, and ask for an extension if the balance will arrive after the deadline.
Should I keep working for a client who is paying late?
That is a commercial call, but continuing to invoice a non-paying client increases the amount at risk and the number of open entries. Many exporters pause new work until a payment plan is agreed in writing.
Bottom line
Late payment is common; an unexplained open entry is avoidable. Chase in writing from day one, decide by month six, and ask your bank for an extension well before month nine using our free realisation extension request letter.
This guide is general information for Indian businesses, not legal or tax advice. Rules and bank processes change — confirm specifics with your AD bank or chartered accountant.