Legally, invoice payment depends on the agreed-upon terms, but if none are specified, the industry standard and common legal benchmark is 30 days from receipt. While some payments are due upon receipt, many B2B contracts allow 30 to 60 days, and legal, binding obligations for payment usually exist until the statute of limitations expires, which is often two to six years.
A business owner can set their own payment terms when it comes to invoicing. They can choose to offer discounts for early payments and payment upfront. 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.
Always clearly state the due date
Invoices must always include the invoice date as well as the due date. Setting a due date encourages the client to pay you within a certain time frame. The general rule is 30 days from the invoice date.
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.
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.
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.
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.
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.
If you have an unpaid invoice, here are some steps you can take to try and resolve the situation:
Call a collection agency
This may be the best solution for small payments, as you often won't have to put up any money—the collection agency will just take a part of the recovered sum. For larger delinquent payments, filing a lawsuit may be warranted.
How long does an unpaid invoice remain valid for collection? Under the Limitation Act 1980, invoices remain valid for up to six years from the date the customer last acknowledged the debt or made a partial payment.
Business clients (B2B)
For business transactions, the usual term is 30 days. A longer period (up to 60 days) is possible if both parties agree in writing. However, many freelancers choose shorter freelance invoice payment terms, such as 14 or 30 days, to protect their cash flow.
Many businesses extend net 30 terms with their invoices, which means you have 30 days to make the payment. Some even give net 60, 90, or even higher terms. This helps with your cash flow and gives you an opportunity to assess the product or service you have purchased before you pay for it.
The standard invoice timeline usually spans 30 days, often referred to as Net 30 terms, but the specific duration can vary based on industry standards, client payment processes, and specific invoice terms.
➢ Treasury Regulation 8.2. 3 provides that unless determined otherwise in a contract or other agreement, all payments due to creditors must be settled within 30 days from receipt of an invoice or, in the case of civil claims, the date of settlement or court judgement.
It is, in effect a statute of limitations that applies to the payment of invoices and how long a creditor can chase a debtor for non-payment of an invoice. It might surprise many companies that unpaid invoices, under a simple contract, can be legitimately chased for up to 6 years.
If no specific payment deadline has been communicated or agreed upon, most customers are generally expected to pay within 30 days of receiving the invoice or the goods or services provided. This 30-day standard is a common default in many business transactions, but it is not legally fixed.
A grace period is the period between the end of a billing cycle and the date your payment is due. During this time, you may not be charged interest as long as you pay your balance in full by the due date. Credit card companies are not required to give a grace period.
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.
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.
The 11-word phrase often cited to stop debt collectors is "Please cease and desist all calls and contact with me, immediately," which leverages your rights under the Fair Debt Collection Practices Act (FDCPA) to halt most communication, though it must be sent in writing via certified mail to be legally binding, and collectors can still notify you of lawsuits.