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How Long Does an Old Invoice Remain Valid?

If you've just discovered an old invoice that was never paid, then you might be wondering whether there's a limit to how old an invoice can be and still be valid to collect. Hopefully you might also be wondering is "How did this happen? Perhaps I should get a good bookkeeper or some help with credit control in my business!"

Business debts are covered by the Limitation Act 1980, this statute of limitations provides timescales as to how long a creditor can chase the debtor for an unpaid debt. Most companies donít 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.

However, before you start trailing back through your ledgers and going all guns blazing to see who hasnít paid you need to pay notice to the following:

  • The Act only applies if you have maintained regular contact with the customer regarding this debt for example you have sent them a monthly / quarterly statement of account.
  • If you have failed to maintain contact then the debtor (your customer) may be able to claim that the outstanding debt is statute barred under the Limitation Act 1980.
  • If it is barred then it would mean you are unable to use the legal system to enforce payment for the outstanding amount.
  • Make sure you have all the required information. If you provided goods then the first thing your customer will request is proof of delivery notes and their purchase order confirmation. There is no point chasing the invoice if you cannot prove the goods were delivered or ordered.
  • Is the invoice in dispute? Again check your records to see if you were at any time made aware that the invoice was in dispute. If your customer has proof that they made you aware of a genuine dispute then this would barr the Limitation Act as previously mentioned.
  • Allow the company time to look into the matter. You cannot expect a response within 24 hours, most companies archive their records every 12 months so if it is 6 years old they will need to dig out all the information. There could have also been in changes to personnel Ė therefore the person you dealt with or ordered the goods or services may no longer be working with the company.

In theory no company should have invoices outstanding more 10 days past their terms let alone 6 years, just imagine the positive effect collecting on time will have on your cashflow. Credit control is a skill and for most businesses can be a very time consuming role Ė therefore it pays to outsource this service to a specialist company. The charges can be less than the cost of hiring an employee.

Do you have a very old invoice you're struggling to collect? Why not try our CreditXS debt collection service? Submit details of the debt online and we'll take care of it for you.

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