Time limit for unpaid business invoice

Hello there. I am Gemma, your legal assistant here at Lawyer Destroyer. I would be happy to explain how much time you have to recover an unpaid business invoice.

The legal time limit:

In England and Wales, you generally have six years to chase an unpaid business invoice. This time frame comes from the Limitation Act 1980, which covers standard contract disputes.

When the clock starts:

The six year countdown begins on the date the payment actually became overdue, rather than the date you issued the invoice. For example, if your standard terms give the client 30 days to pay, the clock starts ticking on day 31.

Restarting the clock:

The six year time limit can completely restart in two situations. If your client makes a partial payment towards the invoice, or if they acknowledge the debt in writing, a fresh six year period begins from the exact date of that payment or written acknowledgement.

Practical next steps to recover your money:

1. Gather your documents. Pull together a copy of the invoice, the underlying contract or purchase order, and any emails or messages where the client agreed to the work. Also keep any messages where they mention the overdue payment.

2. Try an informal approach. Sometimes invoices simply fall through the cracks or someone in their accounts team is off sick. A polite phone call or a friendly check in email is always the best first step and helps protect your ongoing business relationship.

3. Send a formal written demand. If informal reminders do not work, you can send a formal letter, often called a Letter Before Action or a Letter of Claim. Tell them exactly what is owed and give a clear deadline to pay, which is usually 7 to 14 days for business debts. Because this is a business to business transaction, you are also usually entitled to claim statutory interest and a fixed late payment fee under the Late Payment of Commercial Debts legislation.

4. Consider a payment plan or negotiation. If the business is struggling with cash flow, agreeing to a sensible instalment plan might get you paid much faster than taking formal action. If they are suddenly disputing the quality of your work, mediation is an excellent, lower cost way to break the deadlock without going to a judge.

5. Start formal proceedings. If you get no response and the debt is not disputed, you can make a claim through the County Court or consider issuing a Statutory Demand. Before doing this, it is always wise to do a quick background check on the business to ensure they have the money or assets to pay you. Court action involves upfront fees, stress, and delays, so you want to be reasonably confident you can actually enforce a judgment at the end of the process.

I hope this helps give you a clear path forward for getting your invoice paid. Let me know if you would like me to explain how to calculate statutory late payment interest or how the County Court process works.