NOT LEGAL OR FINANCIAL ADVICE
This content is for educational purposes only. Laws change frequently and vary by circumstance. Always consult a licensed attorney in your state before taking any legal action. We are not responsible for any decisions or actions taken based on this information.
California Freelance Invoice Laws
General information about collecting unpaid invoices in California
Last Updated: 2025-01-01 • Always verify with a California attorney
Late Fee Limit
No statutory limit on late fees for B2B contracts
Interest Rate
10% per annum (default judgment rate)
Small Claims Limit
$12,500
Statute of Limitations
4 years for written contracts, 2 years for oral
Additional Context
Late Fees: Late fees must be 'reasonable' and disclosed in contract. Courts may reduce excessive fees.
Interest: Parties can agree to higher rates in writing. Usury laws cap at 10% for non-exempt lenders.
Small Claims: No attorneys allowed. Claims over $12,500 go to Superior Court.
General Best Practices
These are general suggestions, not legal advice. Consult an attorney for your specific situation.
- ✓ Include clear payment terms (Net 30, etc.) in every contract
- ✓ Send invoice immediately upon project completion
- ✓ Document all work with written approval before invoicing
- ✓ Follow up at 15 days, 30 days, and 45 days with escalating urgency
- ✓ Consider offering early payment discounts (2/10 Net 30)
Common Mistakes to Avoid
- ✗ Not having a signed contract before starting work
- ✗ Waiting too long to follow up on overdue invoices
- ✗ Not documenting verbal agreements in writing
- ✗ Setting unreasonably high late fees that courts won't enforce
- ✗ Missing the 4-year statute of limitations
When to Consult an Attorney
For invoices over $5,000 or if the client disputes the work quality, consult an attorney before small claims.
Frequently Asked Questions
What is the maximum late fee I can charge in California?
California has no statutory cap on late fees for B2B contracts, but fees must be 'reasonable' and clearly stated in your contract. Courts can reduce excessive fees. A typical range is 1.5-2% per month.
How long do I have to sue for an unpaid invoice in California?
You have 4 years from the invoice due date to file a lawsuit for written contracts, or 2 years for oral agreements. Don't wait—the sooner you act, the better your chances of collecting.
Can I take a client to small claims court in California?
Yes, for amounts up to $12,500. Small claims is ideal for freelancers because it's fast, cheap (filing fees under $100), and you don't need a lawyer. Cases are typically heard within 70 days.
What interest rate can I charge on overdue invoices in California?
The default legal rate is 10% per annum. You can specify a higher rate in your contract, but it must be reasonable. Many freelancers use 1.5% monthly (18% annually).
Do I need a collection license to collect my own invoices in California?
No, you can collect your own debts without a license. However, if you hire a third-party collection agency, they must be licensed by the California Department of Financial Protection and Innovation.
Sources & References
These are reference sources only. Laws change—verify current statutes before taking action.
- California Civil Code §1717.5
- California Code of Civil Procedure §116.220
- California Constitution Article XV (Usury)
- California Department of Financial Protection and Innovation
IMPORTANT LEGAL DISCLAIMER
This is NOT legal or financial advice. The information on this page is provided for general educational and informational purposes only. It is not intended to be, and should not be construed as, legal, financial, or professional advice.
Laws change frequently. State laws, court rules, and regulations are subject to change without notice. The information presented here may not reflect the most current legal developments or may not apply to your specific situation.
Consult a licensed professional. Before taking any action based on the information on this website, you should consult with a licensed attorney in California who can provide advice tailored to your specific circumstances.
No attorney-client relationship. Viewing this information does not create an attorney-client relationship between you and Happy Freelance Life or its creators.
No liability. Happy Freelance Life and its creators disclaim all liability for any actions taken or not taken based on any information on this website. You assume full responsibility for any decisions or actions you take based on this content.
If you need legal help, please contact the California State Bar Association for attorney referrals or a legal aid organization in your area.
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Take the QuizThis information is for educational purposes only and does not constitute legal advice. Consult a licensed California attorney for specific legal guidance. This page was last updated on 2025-01-01. For current legal information, consult the official California state statutes or a licensed California attorney. Happy Freelance Life is not a law firm and does not provide legal services.