Non-payment is a huge risk to a company's financial stability. That is why it is vitally important to know how and when to initiate the process of claiming non-payment of electronic or analog. It is equally important to know the time limits for these debts, since once they expire, you will not be able to take legal action to recover them. Below, we explain when an unpaid invoice expires, how to claim it, and how to prevent it from affecting your liquidity. We also reveal how easyap improves your billing process with automated solutions for non-payments.
What is the statute of limitations on an unpaid invoice?
By definition, the statute of limitations on an unpaid invoice is the time limit set by law for claiming a debt. Once this period has elapsed without a legal claim having been made, the creditor loses the right to demand payment.
In Spain, the regulations governing non-payment are contained in the Civil Code (Articles 1961 to 1973) and the Civil Procedure Act (LEC). Together, they set out the guidelines and procedures to be followed in order to claim unpaid invoices through the courts.
Therefore, if a company does not claim an invoice within the statute of limitations, it will lose the right to collect it. Consequently, this often leads to significant financial losses and seriously affects a company's liquidity and operations.
But when does the statute of limitations begin?
The limitation period begins to run from the moment the debt becomes due. In other words, in the case of unpaid invoices, the time begins to run from the invoice due date. And if there is no due date, the debt is considered to be due from the moment the goods or services are delivered to the customer.
On the other hand, you should also bear in mind that the period may be interrupted if the creditor initiates any formal action to claim non-payment of an invoice, whether it is an extrajudicial or judicial demand. In these cases, the period restarts.
When does an unpaid invoice expire in Spain?
Following on from what we mentioned in the previous point, in Spain, the statute of limitations on unpaid invoices depends on the relationship between the parties and the nature of the debt. Article 1964 of the Civil Code states that, in general, personal actions that do not have a specific statute of limitations expire after 5 years. This is the period that commonly applies to commercial debts, unless there are exceptions.
In any case, to make it clearer for you, below we detail the general limitation periods for different types of unpaid invoices :
| Type of debt | Statute of limitations | Legal reference |
| Commercial invoices | 5 years | Article 1964 of the Civil Code |
| Invoices for services between companies | 5 years | Article 1964 of the Civil Code |
| Labor invoices | 1 year | Article 59 of the Workers' Statute |
| Taxes due | 4 years | General Tax Law |
| Leases | 5 years | Article 1964 of the Civil Code |
As you can see, and as we mentioned, the general five-year statute of limitations for commercial debts is the most common for most overdue invoices between companies. However, the contractual context and the nature of the debt may also have an influence.
Exceptions to limitation periods
In fact, there are exceptions to these deadlines, depending on the nature of the service or the agreements you have determined between the parties. Some of the most common are:
- Labor relations. According to Article 59 of the Workers' Statute, debts arising from labor breaches have a statute of limitations of one year.
- Interruption of the period. If the creditor claims the debt, the period is interrupted and also restarts.
- Shorter deadlines. In certain agreements, the parties agree to a shorter deadline.
- Public sector. Companies that provide services to public entities must be aware of certain regulations, as deadlines may be shorter in specific cases.
How to claim an unpaid bill?
At this point, we can dive right into the central question of this article: how to claim an unpaid invoice. The process depends on the amount of the debt and whether the customer is willing and acting in good faith on the part of the customer to settle the outstanding debt.
In these situations, regardless of predisposition, there are some general steps that every company should follow when making a claim.
1. Out-of-court phase: attempt to reach an amicable solution
The first step in claiming an unpaid invoice should always be to attempt to resolve the dispute amicably. This way, you can avoid legal costs and maintain a good business relationship with the customer.
In turn, if you are not paid, the steps we recommend you take at this stage would be:
- Resend the invoice with a reminder of the due date and amount.
- Send a certified fax or letter with acknowledgment of receipt requesting immediate payment and warning of the legal consequences in case of non-payment.
- Negotiate a payment plan to split the debt, especially if the customer is going through a difficult financial period and has financial difficulties.
2. Judicial phase: initiate a payment order procedure
If amicable negotiations are unsuccessful, it may be time to take legal action. In Spain, the most common procedure for claiming unpaid bills is the payment order procedure, which is regulated by the Civil Procedure Act. It is characterized by the following:
- It is a quick and simple process designed to streamline small claims.
- You only need to present the unpaid invoice and any document proving the existence of the debt.
- If the debtor does not respond within 20 days, the judgment is enforced.
However, bear in mind that the order for payment procedure is particularly useful for debts not exceeding €2,000, as it does not require the intervention of a lawyer or solicitor in this case. On the other hand, for higher amounts of unpaid debt, it is not the best legal tool.
3. Enforcement of the judgment
Finally, if the court issues a ruling in favor of the creditor and the debtor still fails to make the payment, enforcement of the judgment may be requested. This phase may even include the seizure of the debtor's assets or bank accounts to settle the debt.
How to avoid the problem of unpaid bills
In any case, it is best for everyone to avoid reaching this point. To do so, it will be very helpful to implement preventive measures that improve control and monitoring of accounts receivable. At easyap , we have experience in this field and, based on our track record, we offer several tips for optimizing your billing process and minimize the problems that arise from unpaid invoices.
1. Digitize your invoicing
In the midst of the digital transformation, adopting technological invoicing solutions such as ours helps you to better manage collections and payments. Digitization facilitates the automation of invoice delivery and the issuance of automatic reminders, which reduces the risk of oversights or human error.
2. Define clear payment terms
From experience, we advise you to clearly define the payment terms in contracts from the outset of the business relationship. Include clear due dates and penalties for late payments is a good way to prevent future disputes and facilitate timely payment.
3. Implement automatic reminders
The use of billing software allows you to automate payment reminders, ensuring that your customer receives timely notifications about invoices that are about to expire. Obviously, this reduces the likelihood of non-payment.
4. Keep constant track of accounts receivable
Finally, keep a close eye on outstanding invoices. We assure you that this is an essential measure for acting quickly in the event of overdue invoices. Regularly reviewing the status of accounts receivable allows you to detect potential problems before they become serious.
How does easyap help you claim unpaid invoices?
At this point in the article, it's time to point directly to easyap. Broadly speaking, our solutions facilitate the issuance and receiving invoices and allow you to comprehensively track all your outstanding invoices. Specifically, because we offer you:
- Automation of payment reminders, reducing the possibility of non-payment due to forgetfulness or lack of follow-up.
- Real-time control for financial managers, improving your ability to respond to any incident.
- Integration with ERP, ensuring smooth and consistent operations throughout the company.
In addition, easyap helps you automate the generation of reports on the status of your invoices. This way, you or any financial director can detect patterns and make decisions based on accurate and precise data.
In short, effectively managing unpaid invoices ensures liquidity and financial stability for your company. Knowing the statute of limitations and methods for claiming a debt is vital, and with tools such as those offered by easyap, you can improve your billing control and streamline the claims process. Contact us and we will tell you more.
