Most unpaid business invoices in Minnesota never see a courtroom. They get paid after the right letter, the right call, or the right mention of what happens next. But every one of those steps works better when you know the actual rules: how long you have, what interest you can add, which court hears your claim, and which deadlines quietly close your options. This guide covers the Minnesota statutes that matter for business-to-business debt. It is a working reference for owners, controllers, and credit managers, not legal advice; for a specific account, talk to a Minnesota attorney or a commercial collection agency that works these rules every day.
How long you have: the statute of limitations
Minnesota gives you six years to sue on most contract debt, written or oral, under Minn. Stat. 541.05. The clock starts when the contract is breached, which for an invoice usually means the day payment was due and not made. If the unpaid invoice is for the sale of goods rather than services, the Uniform Commercial Code shortens that to four years (Minn. Stat. 336.2-725). A distributor's unpaid product invoice and a consultant's unpaid retainer therefore sit on different clocks.
Treat those numbers as the outer wall, not a plan. The statute tells you when a lawsuit becomes impossible. Collectability tells you when it becomes unlikely, and that happens much sooner. An account that reaches 90 days past due has usually been deprioritized by the debtor, and one that reaches a year has often been forgotten, disputed, or overtaken by the debtor's own cash problems. The write-off versus collections decision belongs at 60 to 120 days, not at year five.
Interest you can charge on an overdue invoice
Minnesota's default legal rate is 6 percent per year. Minn. Stat. 334.01 sets it, and it applies when nothing in writing says otherwise. The same section lets parties agree to a different rate in writing, which is why a signed credit application or terms and conditions that name a late-payment rate matter so much. Without that paperwork, a demand letter can add 6 percent. With it, the letter can cite the rate the customer already agreed to, and the number gets the debtor's attention.
Once a claim becomes a judgment, a different rule takes over. Under Minn. Stat. 549.09, judgments over $50,000 accrue interest at 10 percent per year until paid. Judgments of $50,000 or less accrue at a rate the state court administrator sets each year off the one-year Treasury bill yield. Prejudgment interest can also run from the date you serve a written notice of claim, which is one reason a properly served demand is worth doing even when you expect to settle.
Which court hears your claim
Minnesota conciliation court, the state's small claims court, hears civil claims up to $20,000 under Minn. Stat. 491A.01 (the limit rose from $15,000 in August 2024; consumer credit claims are capped at $4,000). Filing is inexpensive, hearings are informal, and a business can appear through an officer or employee without an attorney. For an undisputed balance under $20,000 owed by a debtor who is still operating and has assets, conciliation court is a real option, and a good agency will tell you so.
- Claims over $20,000 go to district court, where the rules of civil procedure apply and most businesses use counsel.
- You can sue in conciliation court for a balance over $20,000 only by waiving the excess, which is rarely the right trade.
- A judgment is a piece of paper. Collecting it means finding bank accounts, receivables, or property to levy, and that is usually where an agency or attorney earns their fee.
- Minnesota judgments last ten years and can be renewed (Minn. Stat. 548.09), so a debtor who is broke today may not be broke in year four.
Construction: the deadlines that run from your last day on the job
Construction receivables carry the most time-sensitive rights in Minnesota law, and every one of them is measured from the date you last furnished labor or materials, not from the invoice date and not from when the general contractor stopped answering. Construction collections is its own discipline for this reason.
- Mechanic's lien (private projects): record the lien statement and serve it on the owner within 120 days of your last item of labor or material (Minn. Stat. 514.08). Then start a foreclosure action within one year of that same date (Minn. Stat. 514.12) or the lien dies.
- Pre-lien notice: on many projects, subcontractors and suppliers must serve the owner a written notice within 45 days of first furnishing (Minn. Stat. 514.011) or lose lien rights. Exemptions exist for larger commercial projects, so confirm which side of the line a job falls on before you assume you are covered.
- Payment bond (public projects): you cannot lien public property. Instead, serve a written notice of claim on the surety and the prime contractor within 120 days of your last furnishing, and sue on the bond within one year of that date (Minn. Stat. 574.31).
- Prompt payment: a prime contractor or subcontractor that has been paid must pass undisputed amounts down within ten days. Late payment accrues 1.5 percent per month, the unpaid party may suspend work, and a subcontractor who has to sue recovers attorney fees (Minn. Stat. 337.10).
A lien deadline that passes is gone. If a Minnesota construction account is approaching day 90 from your last work, call someone that week, not that quarter.
Staffing, freight, and other industry-specific leverage
Outside construction, Minnesota does not hand you statutory deadlines, but the leverage is still specific to the industry. Staffing agreements usually contain conversion-fee clauses that survive an unpaid invoice. Freight brokers carry a federal BMC-84 surety bond that a carrier can claim against. Wholesale credit applications often include a personal guarantee that the buyer's owner forgot signing. Equipment rental contracts usually spell out the damage and late-return charges the customer agreed to at pickup. The first job on any placed account is reading the paperwork for these terms, because a demand that cites the debtor's own signature gets answered.
What a Minnesota collection agency has to do
Any agency collecting debt in Minnesota, including business-to-business debt, must be licensed by the Minnesota Department of Commerce under Minn. Stat. 332.33, post a surety bond of at least $50,000, and register each individual collector. Operating without a license is a misdemeanor. Minn. Stat. 332.37 lists the practices a licensed agency may not use, including threats it cannot carry out and misrepresenting who it is or what it can do. Before you place accounts, ask the agency for its license number and confirm it in the Department of Commerce lookup. An agency that will not give you a license number is not the agency.
Licensing matters for a second reason: a debtor's lawyer will check. A demand from an unlicensed collector gives the debtor an easy way to ignore the balance and a possible claim against you. A demand from a licensed, bonded agency that cites the correct statute and the correct deadline reads as the first step of a process the debtor would rather not finish.
Putting the rules to work
The order that tends to work for a Minnesota business: confirm the statute of limitations and any lien or bond deadline first, because those decide the timeline. Pull the signed paperwork and find the interest rate, the guarantee, and any fee clause. Send a demand letter that cites them. If the account is small, undisputed, and the debtor is solvent, consider conciliation court. If it is disputed, large, aging, or the debtor has gone quiet, place it with a commercial collection agency that works on contingency, so the cost tracks the recovery.
RecoverMax works business accounts across Minneapolis, St Paul, and greater Minnesota from an office in St Louis Park, and nationally for clients whose customers are elsewhere. If you have an account you are unsure about, send it over for a free review. We will tell you which of these rules applies and what we would do first.