What to Do When a Client Refuses to Pay After You’ve Finished the Work

You finished the job. You sent the invoice. The payment date came and went. Now the client is ignoring your emails, making excuses, or outright refusing to pay.

Here’s the escalation path from polite reminder to formal tribunal proceedings.

Step 1: Send a Polite Invoice Reminder (Days 1-7 After Due Date)

Start with the assumption that the non-payment is an oversight. Invoices get buried. Accounts payable teams make mistakes.

Send a brief, professional reminder:

• Reference the original invoice number and date
• Restate the amount owing
• Attach the invoice again as a PDF
• Set a new payment deadline (typically 7 days)
• Keep the tone neutral

Timeline: Within 7 days of the original due date.

If the client pays, you’re done. If they don’t respond, move to the next step.

Step 2: Send a Firmer Follow-Up (Days 8-14)

Send a second email with a firmer tone:

• State clearly that payment is now overdue
• Reference your terms of trade or contract (if applicable)
• Mention that continued non-payment may result in formal action
• Offer a payment plan if you suspect cash flow issues
• Set another deadline (7 days)

Timeline: 7-14 days after the original due date.

Some clients will pay at this stage. Others will start negotiating. If they propose a payment plan, get it in writing. If they continue to ignore you, escalate.

Step 3: Letter of Demand (Days 15-30)

A Letter of Demand is the formal notice that precedes legal action. It’s not a court document, but it signals you’re prepared to take the next step.

A Letter of Demand should:

• Identify the parties clearly
• State the amount owing with precision
• Reference the contract, invoice, or agreement that created the debt
• Give a final deadline for payment (typically 7-14 days)
• State the consequences of non-payment (tribunal proceedings, statutory demand, or court action)

Timeline: 15-30 days after the original due date, once informal reminders have failed.

Most disputes settle at this stage. Receiving a properly drafted Letter of Demand makes the client realise you’re serious.

ClaimDone generates a Letter of Demand for $79. You upload your invoice, contract, and any correspondence. The system reads your evidence, drafts the letter, and delivers it automatically via email and registered post.

Step 4: Statutory Demand (If the Client is a Company and Owes $4,000+)

If your client is a registered company (Pty Ltd or Ltd) and owes you $4,000 or more, you can issue a statutory demand under the Corporations Act.

A statutory demand gives the company 21 days to:

• Pay the debt in full, or
• Apply to set aside the demand, or
• Face presumed insolvency and potential wind-up proceedings

Requirements:

• Minimum debt of $4,000
• Company debtor (not a sole trader or individual)
• Liquidated sum (a specific, ascertained amount)
• Undisputed debt (do not use if there’s a genuine dispute)

Timeline: Can be issued after a Letter of Demand is ignored, or immediately if the debt meets the criteria.

ClaimDone prepares the statutory demand and supporting affidavit template for $197. If the company fails to respond within 21 days, you can apply to wind up the company — which typically results in payment or settlement.

Step 5: Tribunal Application (For Debts Under $10,000-$30,000 Depending on State)

If the client is an individual, sole trader, or partnership, or if the debt is under the statutory demand threshold, your next step is the relevant state or territory tribunal.

Each jurisdiction has a small claims tribunal for disputes up to a certain value:

• NSW: NSW Civil and Administrative Tribunal (NCAT) — up to $30,000
• VIC: Victorian Civil and Administrative Tribunal (VCAT) — up to $10,000 (small claims)
• QLD: Queensland Civil and Administrative Tribunal (QCAT) — up to $25,000
• WA: Magistrates Court (small claims) — up to $10,000
• SA: South Australian Civil and Administrative Tribunal (SACAT) — up to $12,000
• TAS: Magistrates Court (small claims) — up to $5,000
• ACT: ACT Civil and Administrative Tribunal (ACAT) — up to $10,000
• NT: Local Court (small claims) — up to $25,000

What you need:

• Completed tribunal application form
• Copy of the invoice and contract
• Evidence of the work completed (photos, timesheets, emails, delivery receipts)
• Proof of delivery of the Letter of Demand
• Filing fee (typically $50-$200, varies by state)

Timeline: File within 6 years of the debt arising (limitation period in most Australian states).

The tribunal is designed to be accessible without a lawyer. Present your evidence clearly, stick to the facts, and let the tribunal decide.

ClaimDone prepares tribunal applications for $197. You upload your evidence, and the system generates a completed application form, statement of claim, and witness statement ready for filing.

Step 6: Enforcing the Tribunal Order

If the tribunal rules in your favour and the client still doesn’t pay, you’ll need to enforce the order. Options typically include:

• Garnishee order: Directs the client’s bank to pay you from their account
• Warrant for seizure and sale: Allows a sheriff to seize and sell the client’s assets
• Examination summons: Requires the client to attend court and disclose their financial position under oath

Enforcement is handled through the relevant court registry. Fees apply, but they’re usually recoverable from the debtor.

When to Get a Lawyer

You don’t need a lawyer for most unpaid invoice disputes. Letters of Demand, statutory demands, and tribunal applications are designed to be handled by individuals and small businesses.

However, consider getting legal advice if:

• The debt is over $25,000
• The client is disputing the quality of your work
• There’s a complex contract with penalty clauses or liquidated damages
• The client has filed for bankruptcy or liquidation
• You’re dealing with a government entity or large corporation with in-house legal teams

How ClaimDone Helps

ClaimDone generates the documents you need to recover unpaid invoices without paying hourly legal fees.

Letter of Demand — $79 Upload your invoice and evidence. The system drafts a formal Letter of Demand and delivers it automatically.

Statutory Demand — $197 For company debtors owing $4,000+. ClaimDone prepares the statutory demand and supporting affidavit template.

Tribunal Application — $197 Complete the intake form. The system generates your application, statement of claim, and witness statement ready for filing.

Flat fees. No subscription. Done in 60 minutes.

Generate a Letter of Demand now and get your unpaid invoice moving.

Final Thoughts

When a client refuses to pay after you’ve finished the work, start with polite reminders, escalate to a formal Letter of Demand, and if necessary, file a tribunal application or statutory demand.

Most disputes settle before reaching the tribunal. A properly drafted Letter of Demand is often enough — it signals you know your rights and you’re prepared to enforce them.

Don’t let unpaid invoices sit. The longer you wait, the harder it becomes to recover the money.

Frequently Asked Questions

How long should I wait before sending a Letter of Demand?

Send a Letter of Demand 15-30 days after the original invoice due date, once you’ve tried at least two polite reminders. Taking action early shows you’re serious and increases your chances of getting paid.

Can I charge interest on an overdue invoice in Australia?

Yes, if your contract or terms of trade include an interest clause. Without a written agreement, you typically can’t charge interest. Some tribunals may award interest from the date of judgment, but it’s not guaranteed.

What if the client claims the work was defective?

If the client raises a genuine dispute about the quality of your work, a statutory demand or tribunal application may not succeed. You’ll need to provide evidence that the work met the agreed standard. If the dispute is complex, consider getting legal advice.

Do I need a lawyer to file a tribunal application?

No. Australian tribunals are designed to be accessible without legal representation. You can file and present your case yourself. ClaimDone prepares the application documents for you, so you just need to file them with the tribunal and attend the hearing.

What happens if I win at tribunal but the client still doesn't pay?

You can enforce the tribunal order through garnishee orders, warrants for seizure and sale, or examination summons. These are handled through the court registry. Enforcement fees apply but are usually recoverable from the debtor.