The statute of limitations for unpaid invoices (written contracts) generally ranges from 3 to 10 years, varying significantly by state, with common periods being 4-6 years, but it can be shorter for oral agreements (around 2-4 years) and depends on the state's law, the type of debt, and if payments or acknowledgments "revive" the clock. For example, California often uses 4 years for written contracts, while others might have longer terms.
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.
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.
The invoice is merely a statement of what the creditor considers is owed by the debtor. If the sale contract stipulates a credit period (say, 30 days from month end) then all that means is that the parties have agreed when an invoice must be paid.
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.
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.
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.
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.
If you have an unpaid invoice, here are some steps you can take to try and resolve the situation:
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.
A 20-year-old debt is likely beyond the statute of limitations (SOL) for most states, meaning a creditor usually can't sue you, but they can still contact you (depending on state law) and the debt might be collectible if you acknowledge it or if there was a court judgment. The SOL for suing on a debt is typically 3-10 years, varying by state and debt type, but judgments can be renewed for 10-20 years or more, allowing collection even after the original SOL expires.
Filing a Lawsuit for Breach of Contract
If your client agreed to pay for goods or services and failed to follow through, they may be in breach of contract. You have the right to sue for the amount owed, and possibly additional damages, depending on your contract and the impact of the missed payment.
In many states, statues of limitations are in place to prevent creditors and debt collectors from using legal action to collect on an older debt. Some debts, though, such as federal student loans don't have a statute of limitations.
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.
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.
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.
Backdating invoices isn't inherently illegal—but misusing it to manipulate revenue or tax periods risks serious penalties.
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.
When that happens, I take the following steps to get seriously past-due invoices paid.
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.
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.
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.
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.