You generally cannot refuse to pay old invoices without a valid reason, as it creates legal and financial risks like debt collection, credit score damage, and lawsuits, even if the invoice is late; however, you might dispute charges for incomplete work, unclear terms, or incorrect fees, and the seller must act within the statute of limitations (which varies by state, e.g., 2-4 years for contracts) before they lose the right to legally chase the debt.
According to California Code of Civil Procedure § 337(1), the statute of limitations for a written contract is four years. Under § 339(1), the limit for an oral contract is two years.
Under the Limitation Act 1980, invoices can be issued up to six years after the work was completed or the goods were delivered. While there is no legal restriction within this time frame, issuing invoices promptly is always best to avoid disputes or complications.
The general rule is that if it becomes necessary to issue legal proceedings to recover an unpaid invoice, then the creditor must do so within the statutory time limit of six years from when the clock starts to tick.
In general, clients cannot refuse to pay late invoices if they have received goods or services as agreed upon in the contract or agreement. Late invoicing doesn't absolve them of their payment obligation.
Maybe you've just discovered an old invoice that slipped through the cracks, or maybe you've been chasing down a customer who seems to have completely disappeared. Either way, you're probably wondering, how long can I keep chasing after this money? The short answer is for most debts, that limit is 6 years.
On the other hand, there's usually no legal requirement that bills be sent out in a timely fashion—so businesses can absolutely bill your months or even years after the fact. If it's a medical debt, there's the added confusion of insurance coverage and the challenge of understanding the bill in the first place.
This rule is under the Limitation Act 1980. These limitations outline that a creditor can pursue unpaid debt from a debtor for up to 6 years from the date of the provided product or service.
Federal law says that invoices remain outstanding for up to 6 years; i.e., you can pursue a client for an unpaid invoice even if that invoice is 6 years old. Past that point, you'll probably need to seek legal action if you want to receive your payment.
It might surprise many companies that unpaid invoices, under a simple contract, can be legitimately chased for up to 6 years. Legal proceedings would need to be issued within 6 years of the date of the invoice to prevent any claim from being statute barred.
Typically, businesses should bill for services or products promptly, but there isn't a specific law that prohibits billing for something from over two years ago directly. The statute of limitations for written contracts in California is four years, and for oral contracts, it's two years.
Do invoices hold up in court? No, an invoice will not usually hold up in court. An invoice is simply a request for payment, but it's not a legal document and therefore not legally binding. You may be able to legally enforce an invoice if you also have a valid contract.
Backdating invoices isn't inherently illegal—but misusing it to manipulate revenue or tax periods risks serious penalties.
Public sector organisations are legally required to pay invoices within 30 days, while consumer clients have no fixed legal period – meaning you can set a fair and reasonable term yourself.
How to Catch Up on Bills When You Fall Behind
If no agreed-upon payment date has been established, a customer must pay a company within 30 days of receiving an invoice or the goods or service.
When that happens, I take the following steps to get seriously past-due invoices paid.
Can a Client Get Sued for Not Paying an Invoice? Yes, if a client refuses to pay, you have the right to take legal action. Failing to pay could result in a court judgment, interest charges, and even damage to their credit rating. It's always best to take action quickly to avoid a lengthy dispute.
The "777 rule" in debt collection, also known as the 7-in-7 rule, is a CFPB regulation (Regulation F) limiting calls: collectors can't call more than 7 times in 7 days for a specific debt, nor call within 7 days of a conversation about that debt. It aims to prevent harassment, applying to calls, texts, and emails, though exceptions exist, and the presumption of compliance can be rebutted by aggressive call patterns like rapid succession or highly concentrated calls.
While your debts could become statute barred after six years, this does not mean the debts no longer exist. In some circumstances, the creditor or a debt collection agency can still try to recover money from you. You can also choose to pay if you wish.
The statute of limitations means creditors and debt collectors cannot sue you for old debt after a certain amount of time, but it's still in your best interest to pay all legitimate debts you owe. The average statute of limitation lasts between three and six years, but it can be as long as 10 years.
The general rule is to keep your invoices for at least three years. This is the case with most supporting documents as well, including receipts, bank statements, payroll records, and any other documentation that relates to income, deductions, or credits on your tax return.
Written Contracts: For debts involving written contracts, such as commercial agreements, promissory notes, or client service contracts, the statute of limitations extends to four years from the date of the breach.
Debts more than 12-months old
If you have an old or outstanding bill then you are obliged to pay this. The only circumstances in which a bill can be written off is if the old debt is more than 12-months old and the supplier was at fault in the way the bill was calculated.
In California, for instance, providers have one year from the date of service to submit claims, which allows for some variation in billing precision and adjustments.