Prescription of receivables: deadlines and remedies, maximizing dunning

What are the statute of limitations for invoices?

The limitation period is the period beyond which it is no longer possible to take action against the debtor.
In the case of commercial relations, there are two different limitation periods.

Type of receivable	Commercial receivables B2B (Business to Business)	B2C (Business to Consumer) trade receivables
Limitation periods	5 years	2 years
Applicable law	Article L110-4 of the French Commercial Code	Article L218-2 of the French Consumer Code.

 

It’s important to note that the limitation period begins the day after the due date indicated on the invoice.
However, this period may vary in B2B depending on the business sector.
For example, in the transport sector, the limitation period is one year.

Why pay attention to limitation periods?

Even if the statute of limitations may seem long to you, it’s also important to bear in mind that it’s very rare for an unpaid bill to be settled in just a few months, especially if you send out reminders irregularly.

That’s why it’s so important to set up a reminder system both before and after an invoice falls due.
Sustained and regular reminders (without being intrusive) help to recover most of your receivables before the end of the statute of limitations.

Note that if a debt is time-barred, you will no longer be able to take a B2C customer to court.
However, you can still hope for amicable collection.
In B2B, you can still try to take legal action, but the debtor can raise the statute of limitations directly with the judge.

Tips for effective reminders

To collect your invoices quickly and avoid the statute of limitations on receivables, it’s crucial to have a good in-house dunning service, or to call on specialized professionals such as SSPCollect.

Questions to ask yourself to improve your dunning process

• Who is responsible for in-house relaunching?
• Do you follow up all overdue items exhaustively?
• Which reminder channel is used: telephone, mail, e-mail?
• Do you pay your bills on time?
• What is your relaunch schedule?
• Do you comply with your internal reminder processes?
• Can you outsource the dunning of all your small unpaid invoices?

 

Mistakes to avoid when sending out reminders

1. It’s important to note that telephone reminders are often the most effective.
   However, many companies find it difficult to carry out these reminders, due to the difficulty of recruiting qualified and stable staff, as well as time constraints.
2. Many companies focus their dunning on large amounts only, but small invoices represent a significant number and could easily be outsourced at very low cost.
3. Many companies are afraid to start a business relationship if they have to raise an invoice.
   An honest company will never reproach its suppliers for asking for what they are owed.
4. Write down your payment terms and invoice deadlines correctly.
   Have your customers sign your General Sales Conditions (GSC).
   These preventive measures will reinforce the validity of your receivables and facilitate their collection.

Outsource your dunning via Collectel(telephone dunning) and SoftCollect(mail dunning) solutions to accelerate invoice payment and reduce unpaid invoices.
These solutions give you the flexibility to manage your sometimes fluctuating volumes of reminders.
With Collectel, there’s no risk: you pay only when you receive the invoice you need.

An invoice that has been proscribed will have virtually no chance of being collected.
So keeping an eye on the statute of limitations protects you from heavy financial losses.
Claiming payment of your invoices is your right.
Being accompanied by professional reminders helps you maintain a good commercial relationship with your customer.