Deductions, chargebacks and disputes that delay payment

← Mexico Trade Corridor

Mexico Trade Corridor · Corridor guide · C. Mexican exporters selling to US buyers

A buyer's fine, shortage claim or quality dispute can cut the payment a supplier expects and stop the finance behind the invoice. This guide sets out how deductions and disputes arise in the corridor, what Mexican law says and how suppliers collect or settle.

Published October 23, 2026 · Facts as of October 23, 2026 · 11 min read · Sources listed at the end · Rules as of October 23, 2026

Facts as of October 23, 2026. This page states the facts as they stood on that date. Tariffs, rules and figures may have changed since publication. Tariffs and trade policy change often, so we review these pages every month and update them.

6% a yearLate payment interest under Mexico's Commercial Code when no rate was agreed, as published by mLey ³

30 to 45 daysHow late many Mexican importers pay on existing contracts, according to the US Commercial Service ⁴

6 to 18 monthsFirst instance of a commercial suit in Mexico, plus appeal, in one law firm's estimate ⁶

MXN 3mClaims up to this amount use the simplified procedure of the Mexican Arbitration Center's 2022 rules ⁹

What is it?

A deduction or chargeback is money a buyer subtracts from a payment for a fine, a shortage or a quality claim, so the supplier receives less than the invoice ¹. A dispute starts when the buyer refuses the goods or the invoice, or raises a defense, counterclaim or set-off ².

Why does it matter?

Payment in Mexico is already slow. Many Mexican importers pay 30 to 45 days late ⁴, and about seven in ten Mexican firms report late payments ⁵. A disputed invoice also loses its finance: under FCI rules, a dispute notice suspends the factor's approval ².

How does it work?

The supplier answers each deduction with delivery records. If talks fail, it can charge late interest under the Commercial Code ³ and collect through the courts or arbitration ^6,8. A signed promissory note opens the fastest court route ⁶.

In this guide

1. How do deductions and disputes arise?
2. Why do disputes cost more in this corridor?
3. What happens to a factored or financed invoice in dispute?
4. What does Mexican law say about late payment?
5. How do you collect a disputed invoice in Mexico?
6. How can suppliers prevent and win disputes?
7. What should suppliers watch next?

01How do deductions and disputes arise?

Deductions start at the buyer's receiving dock. Large retailers fine suppliers for deliveries that miss their rules. When Walmart launched its on-time, in-full (OTIF) program for US suppliers in August 2017, it set the fine at 3% of the value of late, early or missing items ¹. The current rate could not be confirmed from Walmart, and no public source was found on whether Walmart de México uses the same program.

Vehicle makers and tier 1 suppliers also charge back for late delivery or quality failures. No public source was found on how often they do so in Mexico. Our guide to finance for tier 1 and tier 2 suppliers covers the rest of the auto supplier's cash cycle.

A dispute is wider than a deduction. Under FCI's General Rules for International Factoring, a dispute exists when the buyer refuses the goods or the invoice, or raises a defense, counterclaim or set-off ². The buyer may pay part of the invoice and dispute the rest. This short payment raises the supplier's days sales outstanding even when most of the invoice is paid.

1. Goods deliveredThe supplier ships against the purchase order and issues the CFDI for the full amount.
2. Buyer checks receiptThe buyer compares delivery time, quantity and quality with its order and rules ¹.
3. Deduction takenThe buyer pays less than the invoice, citing a fine, a shortage or a quality claim.
4. Supplier disputesThe supplier sends delivery records and contests the deduction in writing.
5. Settle or collectThe parties settle in writing, or the supplier goes to court or arbitration ^6,8.

When Walmart launched its on-time, in-full program for US suppliers in 2017, it set the fine at 3% of the value of late, early or missing items.

02Why do disputes cost more in this corridor?

Payment is already slow before any dispute. The US Commercial Service reports that many Mexican importers pay 30 to 45 days late on existing contracts ⁴. Atradius finds that about seven in ten Mexican firms report late payments, and that overdue invoices average about one fifth of business-to-business invoices ⁵. A deduction adds more days on top of those already past the due date.

In Mexico an invoice mainly serves tax purposes. In court it is evidence that needs supporting documents ⁶. The commercial invoice and the CFDI still matter for lenders, as our guide to electronic invoices (CFDI) explains. A signed pagaré, the Mexican promissory note, gives the supplier a faster route ⁶. The Trade Finance Guide covers promissory notes in general.

The risk differs by buyer. A quality claim is a performance risk that starts with the supplier's own delivery. A buyer that cannot pay is a commercial risk. Our guide to payment terms in the corridor covers how terms shift each risk.

03What happens to a factored or financed invoice in dispute?

A dispute stops funding fast. Under FCI's General Rules, as published in a copy whose version date could not be confirmed, approval of a disputed invoice is deemed suspended once a dispute notice arrives. If the notice comes within 90 days after the due date, the import factor need not pay the withheld amount. If it comes after payment but within 180 days, the import factor can claim the money back ².

The rules then give 180 days for an amicable settlement and three years for a legal settlement. The import factor bears the costs only if the supplier wins in full ². Our guide to factoring in Mexico explains the two-factor model, and the Trade Finance Guide covers factoring in general.

Other finance follows the same logic. Buyer programs, including Nafin's Cadenas Productivas, pay early only on invoices the buyer has approved, so a disputed amount waits. Our guide to supplier finance programs run by US buyers covers those programs. In general practice, a factor treats a disputed or short-paid invoice as ineligible or claims the money back from the supplier under recourse.

Where the cash goes

From invoice to cash when part of a factored invoice is disputed

1. Invoice
   Full invoice issuedThe supplier issues the CFDI for the full amount and the factor approves the buyer.
2. Due date
   Short paymentThe buyer pays less, citing a fine, a shortage or a quality claim.
3. Dispute notice
   Approval suspendedThe factor's approval of the disputed amount is suspended ².
4. Up to 180 days
   Amicable settlementThe parties try to settle without going to court ².
5. Up to 3 years
   Legal settlementIf talks fail, the claim goes to court or arbitration ².

Timing follows FCI's General Rules for factored invoices. Outside factoring, each contract sets its own days.

Factored invoiceFactoring

A dispute notice suspends the factor's approval of the disputed amount ².

Buyer programPayables finance

Only the amount the buyer approves is paid early.

Buyer may not payTrade credit insurance

Covers most of an unpaid invoice if a covered buyer fails to pay.

Faster claim in courtPromissory notes

A signed pagaré opens the executive commercial suit in Mexico ⁶.

04What does Mexican law say about late payment?

Mexico's Commercial Code, Article 362, sets late payment interest. A buyer that pays late owes interest from the day after the due date, at the agreed rate or at 6% a year if none was agreed ³. This text comes from the mLey legal text portal. Check the official text before relying on it.

Time limits matter. Commercial obligations generally expire after 10 years. Direct action on a pagaré expires three years after maturity. An email does not stop the clock. A court filing, a written acknowledgment of the debt or a partial payment does ⁶.

Arbitration is an option where the contract allows it. The Commercial Code follows the UNCITRAL Model Law almost entirely. Awards are final, and the only challenge is annulment within three months of notice of the award ⁸. Mexico is a party to the New York Convention, so an award is generally easier to enforce there than a foreign court judgment ⁶.

Rules in force

As of October 23, 2026. Live list: corridor watch.

Measure	What it does	Since	Status
Commercial Code, Article 362	Late payer owes the agreed interest, or 6% a year if none was agreed, from the day after the due date 3	Current text	Check official text
Limitation, commercial obligations	Generally 10 years. A court filing, written acknowledgment or partial payment interrupts it; an email does not 6	Current text	In force
Limitation, pagaré	Direct action expires three years after maturity 6	Current text	In force
Commercial Code, arbitration title	Follows the UNCITRAL Model Law; awards final; annulment only within three months of notice 8	Current text	In force
CAM arbitration rules	Simplified procedure for claims up to MXN 3,000,000: sole arbitrator, reduced fees, one round of written pleadings 9	Dec 1, 2022	Confirm threshold
New York Convention	Mexico is a party, so arbitral awards are generally easier to enforce than foreign judgments 6	Current	In force

05How do you collect a disputed invoice in Mexico?

Most disputes end in talks. The goal is a written settlement that the supplier can enforce. A written acknowledgment of the debt, ideally by notarial deed or with a new pagaré, turns a settlement into an enforceable title ⁶.

If talks fail, the court route depends on the documents. The executive commercial suit is the fastest and allows attachment of assets at the start, but it needs an enforceable title such as a pagaré. The oral commercial suit and the ordinary commercial suit cover other claims, and commercial insolvency, called concurso mercantil, applies when the buyer cannot pay its debts ⁶.

The time estimates in the table come from a single foreign law firm, ARROWS. No official court statistics were retrieved for this guide ⁶. The Mexican Arbitration Center, CAM, offers a simplified procedure for smaller claims under rules in force since December 1, 2022, as summarized by the law firm Garrigues ⁹.

Compare

Routes to collect a disputed invoice in Mexico

Durations are estimates by one law firm, ARROWS (2026); no official court statistics were retrieved. CAM threshold as summarized by Garrigues ^6,9.

Route	When it fits	Time, as estimated
Written settlement	Both sides agree; best with a notarized acknowledgment or a new pagaré 6	Demand phase of 1 to 3 months 6
Executive commercial suit	The supplier holds an enforceable title such as a pagaré; assets can be attached at the start 6	About 6 to 12 months to judgment if the debtor does not defend hard 6
Oral or ordinary commercial suit	No enforceable title; ordinary suit for complex cases 6	First instance 6 to 18 months plus appeal; complex cases 2 to 4 years 6
Amparo	A constitutional challenge by either side after judgment 6	Can add about a year 6
Arbitration (CAM)	The contract has an arbitration clause; simplified procedure up to MXN 3,000,000 9	Award final, annulment only within three months 8
Concurso mercantil	The buyer cannot pay its debts in general 6	Depends on the insolvency case

06How can suppliers prevent and win disputes?

Evidence decides most disputes. A supplier should keep the records that prove what was ordered, shipped and received, and the contract terms that set the price, the due date and the place of payment ^6,7. For a retailer, check its compliance rules in its supplier portal, since fines and dispute windows change.

A dispute can also be priced in advance. Trade credit insurance covers a buyer that fails to pay, and a factor or insurer will ask how disputes are handled. Tariff changes under the USMCA review can also lead to claims over who carries new costs; the live list is on our corridor watch page.

Checklist

Records that win a deduction dispute

• Order and changesThe purchase order and every amendment, with dates ⁷.
• Shipping noticesThe advance ship notice and EDI log that show what was sent and when ⁷.
• Proof of deliveryBill of lading and the carrier's proof of delivery with timestamps, plus the buyer's receiving record ⁷.
• Contract termsPrice, due date, place of payment, and exact legal names and tax IDs of both parties ⁶.
• Enforceable titleA signed pagaré or a notarized acknowledgment of the debt ⁶.

For court in Mexico, add a notarized power of attorney and certified Spanish translations ⁶.

07What should suppliers watch next?

Retailer compliance rules, the arbitration rules and the Commercial Code can all change. The items below are the dated points found for this guide.

• PendingWalmart's current OTIF targets and fines. The published 3% fine dates from the 2017 launch ¹.
• Aug 27, 2026ARROWS updated its guide to collecting debts in Mexico, with first instance at 6 to 18 months plus appeal ⁶.
• May 13, 2026CMS reviewed the rules for challenging arbitral awards seated in Mexico: annulment only, within three months ⁸.
• Feb 17, 2026The US Commercial Service reported that many Mexican importers pay 30 to 45 days late ⁴.
• Dec 1, 2022CAM's current arbitration rules took effect, with a simplified procedure for smaller claims ⁹.

Questions traders ask

What is a deduction or chargeback?

It is money a buyer subtracts from a supplier's payment for a fine, a shortage or a quality claim. The supplier receives less than the invoice. Large retailers fine suppliers for deliveries that miss their rules, and vehicle makers charge back for late or faulty parts.

Can a supplier charge interest on a late payment in Mexico?

Yes. Under Article 362 of Mexico's Commercial Code, a late payer owes interest from the day after the due date, at the agreed rate or at 6% a year if none was agreed. Check the official text before relying on it.

What happens to a factored invoice if the buyer disputes it?

Under FCI's General Rules for International Factoring, the import factor's approval is suspended once a dispute notice arrives. The parties then have 180 days to settle amicably and three years for a legal settlement. In general practice, a disputed invoice cannot be financed until it is settled.

How long does it take to collect an unpaid invoice through Mexican courts?

One law firm estimates 6 to 18 months at first instance plus appeal, and 2 to 4 years for complex cases. An executive suit based on a pagaré can reach judgment in about 6 to 12 months if the debtor does not defend hard. No official statistics were retrieved.

Is arbitration an option for disputes with a Mexican buyer?

Yes, if the contract has an arbitration clause. Mexico's Commercial Code follows the UNCITRAL Model Law, awards are final, and Mexico is a party to the New York Convention. The Mexican Arbitration Center offers a simplified procedure for smaller claims.

Read next

• Corridor guidePayment terms in the corridor: open account and the alternatives
• Corridor guideElectronic invoices (CFDI) and why lenders check them
• Corridor guideFactoring in Mexico: how exporters sell invoices for cash
• Corridor guideSupplier finance programs run by large US buyers
• Corridor guideSupplying vehicle makers: finance for tier 1 and tier 2 suppliers
• Product briefAuto parts: the trade that crosses the Mexico-US border in both directions
• Ossiano Trade Finance GuideHow each trade finance instrument works
• GlossaryTrade finance terms in plain English

Collecting on invoices between Mexico and the US? Ossiano Capital works on trade finance in this corridor.

Start the Conversation

Sources and notes

1. MH&L News, Walmart suppliers will be fined for both early and late deliveries, July 13, 2017. https://www.mhlnews.com/global-supply-chain/article/22054435/walmart-suppliers-will-be-fined-for-both-early-and-late-deliveries
2. FCI, General Rules for International Factoring, copy published by Sinoblawg (version date not confirmed). https://www.sinoblawg.com/1818/
3. mLey, Código de Comercio, Article 362, legal text portal. Not confirmed against the official text. https://mley.mx/CCom/articulo/362/
4. US Commercial Service, Mexico Country Commercial Guide: Trade Financing, February 17, 2026. https://www.trade.gov/country-commercial-guides/mexico-trade-financing
5. Atradius, B2B payment practices trends in Mexico 2026. https://atradius.us/knowledge-and-research/reports/b2b-payment-practices-trends-in-mexico-2026
6. ARROWS (law firm), How to collect receivables in Mexico, published March 31, 2026, updated August 27, 2026 (in Czech). https://www.arws.cz/novinky-v-arrows/jak-vymahat-pohledavky-v-mexiku
7. Beancount.io blog, Walmart OTIF chargebacks: targets, fines and dispute guide, October 14, 2026 (secondary source). https://beancount.io/blog/2026/10/14/walmart-otif-chargebacks-on-time-in-full-targets-fines-dispute-guide
8. CMS, Arbitration in Ibero-America: challenges to arbitral awards in arbitrations seated in Mexico, May 13, 2026. https://cms.law/en/int/publication/Arbitration-in-Ibero-America-a-comparative-perspective/What-is-the-regime-of-challenges-to-arbitral-awards-in-arbitrations-seated-in-Mexico?contentLang=por-PT
9. Garrigues, New arbitration rules issued by the Mexican Arbitration Center, December 2022. https://www.garrigues.com/en_GB/new/new-arbitration-rules-issued-mexican-arbitration-center-cover-important-need-local-arbitration.md

All facts on this page are as of October 23, 2026, the date of publication, and may have changed since. Rules and tariffs are as of October 23, 2026 and change often: check the corridor watch before you act.

About this guide. Prepared for Ossiano Capital. People planned, researched, wrote and checked this guide, using AI tools to help with research and checking. You are welcome to quote or reuse it: please credit Ossiano Capital and link to this page.