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.
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.
The 6-year rule derives from the Limitation Act 1980 sets an important piece of law that governs the period creditors have to issue court proceedings for a debt. For most unsecured business debts, for example, unpaid invoices, the law allows you six years from the time the debt became due to start legal action.
Stick within the legal time limit for invoicing.
Although the legal time limits for invoicing are usually forgiving, you should send invoices within 30 days to maintain a steady cash flow. Electronic signatures can help you keep track of your invoices.
If that party has not provided you any work agreement, then trying to invoice you for 10 years would not be appropriate. Statutory limitations apply which means only six years of invoices can be claimed.
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.
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.
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.
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.
False invoicing may also be considered invoice fraud. This occurs when a business sends an invoice to a customer to pay for goods or services that the business is aware that the customer did not purchase.
Most companies don't realise that they are entitled to chase invoices that go back as far as 6 years. It is important to remember that the time limit starts from when your customer last acknowledged owing the debt or made a payment on account against the invoice, not from when the invoice became due.
Under the Limitation Act 1980, unsecured credit debts, such as credit cards or personal loans, become statute barred after six years. The rules on when you start counting the six years depend on the type of debt being collected. There are also some things that can stop or restart the clock.
The Bureau of Internal Revenue (BIR) explains the provisions about removing the five (5) year validity period on receipts/invoices in its Revenue Memorandum Circular (RMC) 123-2022. The bureau stated that it would take effect on July 16, 2022, fifteen (15) days from the publication date.
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.
Debts you're not responsible for
You might not have to pay a debt if: it's been 6 years or more since you made a payment or were in contact with the creditor. there was a problem when you signed the agreement, for example if you were pressured into signing it or the agreement wasn't clear.
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.
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.
Is there a time limit for issuing an invoice? 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.
Backdating invoices isn't inherently illegal—but misusing it to manipulate revenue or tax periods risks serious penalties. In the US, strict accounting standards like ASC 606 and IRS rules require invoice dates to accurately reflect when goods or services were delivered—not when paperwork is processed.
This limitation period starts the day after the due date mentioned on the invoice. As a general rule, this deadline is set at 30, 45 or 60 days after the issue of the invoice according to the legislation in force, depending on the creditor's sector of activity.
How to Catch Up on Bills When You Fall Behind
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.
Therefore an invoice would be invalid if it did not include such details as: the name and address of the person (customer) to whom the goods or services have been supplied.
An invoice is not a legally binding agreement—but it does serve as a record of a transaction. It's evidence a product was delivered or a service was rendered and an amount is due in return.