Old, Unpaid Invoices Remain Valid for Up to 6 Years. There are Caveats!
The late, overdue and non-payment of invoices is a major problem in the UK, often with significant consequences. The FSB, for example, estimates that 36% of its members suffer cash flow problems as a result of the debts they are owed, which can lead to insolvency. It’s a problem that our commercial debt recovery solicitors focus on daily, in a successful drive to collect such debts for our clients. As part of our work as a law firm dealing in debt recovery, one question we are often asked is how long does an old, unpaid invoice remain valid? The answer is 6 years, but there are always caveats, as our team of debt recovery solicitors advise in this article.
Talk to us about old, unpaid invoices
Is There a Time Limit on Invoices?
Most businesses of all sizes will have asked this question at some time. It might just be a small invoice that has slipped through the net; perhaps one that a long standing client whom you trust and usually pays on time simply isn’t paying despite your promptings; or even a larger invoice that in good times you didn’t chase that hard, but suddenly becomes important due to a cash squeeze caused by other factors.
There could be other reasons, but whatever the reason, the answer to the question is that business debts are covered by the Limitation Act 1980. 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. Legal proceedings would need to be issued within 6 years of the date of the invoice to prevent any claim from being statute barred. However, when a debtor has made a payment within the 6 years, this is considered an acknowledgement of the debt and may have the effect of extending the limitation period and preventing the claim from being statute barred.
This last point is important and means that you must have effective credit control in place so that if you need to bring in debt recovery solicitors to reclaim an old debt, there is at least a paper trail to work with. However, as with all things there are caveats with the 6-year rule when it comes to trying to claim payment for old invoices.
Important Caveats to the 6-Year Old Invoice Rule
Without paying attention to the following, it is unlikely you will successfully claim payment of an old invoice. In no particular order, these caveats are:
- Maintain regular contact. It is important when pursuing an old debt that you have made an effort to chase it to prove that, despite your best efforts, it has not been paid. If it goes beyond 6 years and has not been acknowledged in writing or by way of (at least part) payment by the debtor, it is likely to become statute barred under such circumstances.
- Can you prove the goods/services were actually delivered? The longer an invoice goes unpaid the easier it is for the debtor to cast doubt on whether the goods/services were delivered, either in part or full. If you have all the necessary documentation – delivery notes, digital signatures, or even an email saying thank you for the safe delivery – that can prove delivery, then life becomes easier.
- Give the Company Time. Much can happen in 6 years. Changes in systems and personnel for example. So, when you decide to chase an old unpaid invoice, the debtor, quite reasonably, will want time to check their records
What Happens if None of These Caveats Apply? How Can I Get Payment?
This is where our commercial debt recovery solicitors come in. It might be that none of the above caveats apply, that you have done everything right and still the debtor won’t pay you what he/she owes. If that is the case, call us on 01922 700730 or contact us for an initial chat. It might well be that a solicitor’s letter before action will deliver a positive outcome, helping your cashflow, although ultimately litigation might be necessary. Either way, the appropriate legal action requires much consideration and detailed professional knowledge before proceeding to move forwards to collect the business debt.
Best advice is not to leave old invoices unpaid for long without taking action. The longer you leave it the harder it gets for debt recovery, plus of course, the debtor company may no longer be trading or has had a change of management, adding to the difficulty. Dealing with debt on your own is not easy.
Our debt recovery solicitors have been focusing on recovering unpaid invoices since 1978. We are the longest established specialist form of debt recovery solicitors in the UK, and we have recovered £millions for our clients from past due invoices during these 40 years. We offer a full range of debt recovery and debt collection services to collect the money owed, including mediation, dispute resolution, negotiation and enforcement.
Once you instruct us, our experienced debt recovery lawyers will use all their expertise and experience to recover the money that is owed and/or reach a good settlement on your behalf. Whatever your circumstance, client care is always at the top of our agenda whilst we are managing your claim. Click here to see some of our testimonials.