What to Do When a Client Refuses to Pay Your Invoice (Australia)

You did the work. You sent the invoice. The payment date came and went. Now you are chasing, and the client is ignoring you, making excuses, or outright refusing to pay.

Non-payment is a commercial problem with a commercial solution. This guide walks you through the escalation path — from polite reminder to formal demand to a tribunal or court claim — so you can recover what you are owed without wasting time or money.

Why clients refuse to pay invoices

Understanding the reason behind non-payment helps you choose the right response. Common causes include:

• Cash flow problems — the client genuinely cannot pay right now
• Dispute over quality — they claim the work was defective or incomplete
• Invoice not received — it went to spam, the wrong email, or got lost in their system
• Waiting on their own payment — they are stuck in a chain of unpaid invoices
• Intentional avoidance — they never intended to pay and are hoping you will give up

In most cases, the client is not a criminal. They are disorganised, stretched thin, or genuinely unhappy with something. Your job is to escalate professionally and commercially, not emotionally.

Step 1: Send a polite payment reminder

Before you escalate, give the client the benefit of the doubt. Send a short, polite email reminder that includes:

• The invoice number and date
• The amount owing
• The original due date
• A request for payment within 7 days

Keep it brief and professional. This is a commercial communication, not a personal grievance.

Example:

> Hi [Name], > > I hope you are well. I am following up on invoice #1234 dated 15 March 2025 for $2,500, which was due on 30 March 2025. > > If payment has already been made, please disregard this email. Otherwise, I would appreciate payment within the next 7 days. > > Let me know if you have any questions. > > Thanks, > [Your Name]

If the client responds with a genuine issue — wrong amount, missing documentation, quality concern — deal with it immediately. Resolving the dispute now is faster and cheaper than escalating.

Step 2: Follow up with a formal payment demand

If the polite reminder is ignored, send a second, firmer email. This one should:

• State the overdue amount clearly
• Reference the original invoice and any prior communication
• Set a final deadline (usually 7-14 days)
• Mention that you will take further action if payment is not received

Example:

> Hi [Name], > > I refer to my email dated 5 April 2025 regarding invoice #1234 for $2,500, which remains unpaid. > > Payment is now 21 days overdue. I request payment in full by 20 April 2025. > > If payment is not received by this date, I will issue a formal letter of demand and pursue recovery through the relevant tribunal or court. > > Please contact me immediately if there is a reason for the delay. > > Regards, > [Your Name]

This is still professional, but it signals that you are serious. Many clients pay at this stage because they realise you are not going away.

Step 3: Issue a letter of demand

If the client still does not pay, escalate to a formal letter of demand. This is a legal-style document that:

• States the debt owed, including any interest or costs
• Cites the relevant law (typically contract law or consumer protection legislation)
• Demands payment within a specified timeframe (typically 7-14 days)
• Warns that failure to pay will result in tribunal or court proceedings

A letter of demand carries weight because it shows you are prepared to take the next step.

What a letter of demand should include:

• Your details and the debtor’s details
• A clear statement of the debt (invoice number, date, amount)
• The legal basis for the claim (breach of contract, goods sold and delivered, services rendered)
• A demand for payment within a specified period
• A warning that proceedings will be commenced if payment is not made
• Your contact details for payment or dispute resolution

It is the last off-ramp before formal proceedings.

Step 4: Lodge a tribunal or court claim

If the letter of demand is ignored, your next step is to lodge a claim. In some states a money claim goes to a tribunal; in others it goes to a court. The forum and the limits depend on your state.

Where an unpaid invoice claim goes:

• New South Wales — Local Court of New South Wales: Small Claims Division up to $20,000; General Division over $20,000 up to $100,000 (a business owed money has a debt claim, not an NCAT matter)
• Victoria — Victorian Civil and Administrative Tribunal (VCAT), Civil Claims List
• Queensland — Queensland Civil and Administrative Tribunal (QCAT): minor civil dispute up to $25,000
• Western Australia — Magistrates Court of Western Australia: minor case claims up to $10,000; general procedure claims up to $75,000
• South Australia — Magistrates Court of South Australia: minor civil action up to $12,000; general claims up to $100,000
• Tasmania — Magistrates Court of Tasmania (Civil Division): claims up to $50,000
• Australian Capital Territory — ACT Civil and Administrative Tribunal (ACAT): civil disputes up to $25,000
• Northern Territory — Northern Territory Civil and Administrative Tribunal (NTCAT): small claims up to $25,000

The small claims processes are designed to be simple and affordable. You do not need a lawyer. You file an application or statement of claim and pay the filing fee. Filing fees change each 1 July; check the current fee on the tribunal’s or court’s website before you file. The client is served with the claim and has an opportunity to respond.

What you need to lodge:

• Completed application form or statement of claim (available on the tribunal’s or court’s website)
• Copy of the invoice
• Copy of any contract or terms and conditions
• Copies of all correspondence (emails, letters, payment reminders)
• Copy of the letter of demand
• Evidence of delivery (if applicable)

In many forums, a registrar, conciliator or mediator will first try to help the parties settle. If that fails, the matter proceeds to a hearing where you present your evidence and the tribunal or court makes a binding decision.

Step 5: Enforce the order or judgment

If you win, you receive a money order or judgment. The client is legally required to pay. If they still refuse, you can enforce the order through:

• Garnishee order — the client’s bank or employer is directed to pay you directly
• Instalment order — the client pays in instalments over time
• Examination summons — the client is required to attend court and disclose their financial position
• Warrant of execution — a sheriff seizes and sells the client’s assets to satisfy the debt

Enforcement is a separate process. The tribunal’s or court’s website sets out the forms and instructions.

How Claim Done helps with unpaid invoices

Claim Done is built for this situation. You tell us about your invoice, contract, and any correspondence. Our Programmatic Algorithms draft a professionally formatted letter of demand and deliver it to the client by email.

If the client still does not pay, Claim Done can prepare your tribunal application and a witness statement. You attach your own evidence and lodge the tribunal’s or court’s form yourself.

What you get:

• Letter of demand drafted and sent — $49 flat fee
• Tribunal application pack prepared (for a New South Wales debt, a Local Court statement of claim) — $97 flat fee
• No subscription, no hourly billing, no hidden costs
• Done in about 5 minutes, Australia-wide

Claim Done does not give legal advice. It generates legal-style documents based on the information you give us.

Recover your unpaid invoice with Claim Done

Do not let unpaid invoices sit. The longer you wait, the harder it is to recover. Act early, escalate professionally, and use the tools available to you.

If a client refuses to pay your invoice, Claim Done can draft and send a formal letter of demand in about 5 minutes. Tell us about your invoice and correspondence, and our Programmatic Algorithms generate a professionally formatted demand letter — delivered by email.

Start your letter of demand now for $49. No subscription, no hourly fees, Australia-wide.

Frequently Asked Questions

How long should I wait before sending a letter of demand?

Send a polite reminder 7 days after the due date, a formal follow-up 14-21 days later, and a letter of demand if payment is still not received. Do not wait longer than 30-45 days overdue before escalating to a formal demand.

Can I charge interest on an overdue invoice in Australia?

Yes, if your contract or terms and conditions include an interest clause. Without a written agreement, you may be able to claim interest under the relevant state legislation. Check your state’s rules or include an interest clause in your terms.

What if the client claims the work was defective?

If the client raises a genuine dispute about quality, you may need to resolve that before pursuing payment. Provide evidence of the work completed, any approvals or sign-offs, and correspondence showing the client accepted the work. If the dispute is not genuine, proceed with the letter of demand and a tribunal or court claim.

Do I need a lawyer to recover an unpaid invoice?

Not usually. Smaller unpaid invoice claims can be handled without a lawyer through your state’s small claims process, whether that is a tribunal or a court (in New South Wales, the Local Court’s Small Claims Division, for claims up to $20,000). You can issue a letter of demand yourself or use Claim Done to generate one, then lodge a claim if needed.

What happens if the client is a company and goes into liquidation?

If the client company enters liquidation, you become an unsecured creditor and must lodge a proof of debt with the liquidator. Your chances of recovery depend on the company’s assets. If you suspect insolvency, consider issuing a statutory demand before the company enters liquidation.