Legal Question in Business Law in California

On as written contract you have four years from the date of breach to sue, although if you wait too long judges become uneasy about accepting the validity of your claim. You do not say whether they ae paying you for the new work. If they did not pay you once, why do you think they will not pay you again? Their sending the bills back has no legal meaning; have they contested the billings aside from the verbal "suggestion"? Unless you really need the money from them and are sure they will pay for the new work, sue them now and slap a mechanics lien on their house for any unpaid work within the legal framework.

I don't see anything in your question indicating that you have a written contract, or that you are working on a house. Sending the bills back does have legal significance; it places them in dispute and prevents an "account stated" or implied admission of the amount owed from arising.

The usual result of late billing is ever-increasing likelihood of never getting paid. I can't really advise you what to do without more complete information, but unless you can negotiate a satisfactory compromise, I think you should sue the client in Small Claims or Superior Court, as appropriate to the amount owed.

I would also suggest that if you are in business to make a living that you should pay more attention to having clear written contracts in place and getting your bills out regularly.