You finished the work. You sent the invoice. Now it’s been weeks and the client still hasn’t paid. They’re not responding to emails, they’re making excuses, or they’ve gone silent entirely.
You have options, and they follow a clear escalation ladder. Each step increases pressure, formality, and cost.
Step 1: Polite Follow-Up (Days 1-14 After Due Date)
Start with a simple, professional email or phone call. Assume the invoice was overlooked, sent to spam, or lost in their accounts system.
What to include:
- Invoice number and date
- Copy of the invoice attached
- Confirmation of the payment terms agreed
- Ask if there’s any issue with the work or invoice
Timing: Send this 7 days after the due date, then again at 14 days.
Cost: Your time only.
If they respond with a query or dispute, address it immediately. If they ignore you, move to step 2.
Step 2: Formal Overdue Notice (Days 15-21)
This is still business-to-business communication, but firmer. You’re making it clear the debt is overdue and you expect immediate payment.
What to include:
- Invoice number, date, and amount owing
- Clear statement that payment is overdue
- Request for payment within 7 days
- Note that further action will be taken if payment is not received
Timing: Send this around day 15-21 after the original due date.
Cost: Your time only.
Tone: Professional but direct. No threats, no emotion. Just facts.
This step often works because it signals you’re serious without escalating to legal action yet.
Step 3: Letter of Demand (Days 22-30)
If the client still hasn’t paid or responded, it’s time for a formal letter of demand. This is a legal document that sets out your claim and gives a final deadline before you take further action.
What a letter of demand does:
- Formally demands payment of the debt
- Cites the contract, purchase order, or terms of engagement
- References applicable legal principles
- Gives a final deadline (typically 7-14 days)
- States the consequences of non-payment (tribunal application, statutory demand, or court action)
Timing: Send this around day 22-30 after the original due date.
Cost: $79 with ClaimDone (generated and sent automatically), or $300-$800 if prepared by a solicitor.
Why it works: A letter of demand is often the turning point. It shows you’re willing to take formal action, and many clients pay immediately to avoid the cost and stress of a tribunal or court case.
The letter must be accurate. Do not exaggerate the debt, do not threaten action you cannot take, and do not make false claims.
Step 4: Pre-Action Steps (Days 31-45)
If the client still hasn’t paid after receiving your letter of demand, you need to decide whether to escalate to a tribunal or court. Before you do:
Confirm the debt is undisputed. If the client has raised a genuine dispute about the quality of work, the scope, or the price, you may need to negotiate or provide evidence before proceeding.
Check the client is still solvent. If the client is a company, search the ASIC register to confirm it’s still registered. If it’s in liquidation, your options change.
Gather your evidence. You’ll need to prove the debt at the tribunal. Collect:
- The original contract, quote, or terms of engagement
- The invoice(s)
- Proof of delivery or completion of work
- Any correspondence showing the client accepted the work or price
- Records of your follow-up attempts
Consider the cost vs. benefit. If the debt is under $500, tribunal fees may not be worth it. If it’s over $20,000, you may need to go to the Local Court instead of NCAT.
Step 5: NCAT Application (For Debts Under $20,000)
If the debt is under $20,000 and the client is an individual or sole trader, you can apply to the NSW Civil and Administrative Tribunal (NCAT) for a money order.
NCAT filing fee (as of 2024):
- Claims up to $5,000: $99
- Claims $5,001 to $10,000: $198
- Claims $10,001 to $20,000: $297
How it works:
- You lodge an application online or by post
- NCAT sends the application to the other party
- NCAT lists the matter for a hearing (typically within 4-8 weeks)
- Both parties attend the hearing and present evidence
- The tribunal member makes a decision on the day or shortly after
What you need to prove:
- There was a contract or agreement
- You performed the work or delivered the goods
- The client has not paid
- The amount claimed is correct
Timing: From application to hearing, expect 6-12 weeks.
Enforcement: If you win, NCAT issues a money order. If the client still doesn’t pay, you can enforce the order through the Sheriff’s Office or a court-registered debt collector.
Limitations: NCAT typically cannot award costs unless the case involves consumer claims. You generally cannot recover your filing fee or legal costs.
Step 6: Local Court (For Debts Over $20,000 or Company Debtors)
If the debt is over $20,000, or if the client is a company, you’ll need to file in the NSW Local Court instead of NCAT.
Local Court filing fee (as of 2024):
- Claims up to $10,000: $199
- Claims $10,001 to $100,000: $594
- Claims over $100,000: $1,188
Process:
- File a statement of claim
- Serve the claim on the defendant
- The defendant has 28 days to file a defence
- If they don’t defend, you can apply for default judgment
- If they do defend, the matter proceeds to mediation or hearing
Timing: From filing to judgment, expect 3-6 months (longer if defended).
Costs: You can claim legal costs if you win, but only if the court orders it. Costs are usually awarded on a party-party basis, which is less than your actual legal bill.
When to use this: Only if the debt is large enough to justify the time and cost, or if you need to enforce against a company.
Step 7: Statutory Demand (For Company Debtors Owing $4,000+)
If the client is a registered company and owes you $4,000 or more, you can serve a statutory demand under the Corporations Act.
What it does:
- Gives the company 21 days to pay the debt or apply to set aside the demand
- If they do neither, you can apply to wind up the company
Why it’s powerful: Most companies pay immediately rather than risk insolvency proceedings.
Cost: $197 with ClaimDone (Form 509H and affidavit template prepared), plus service costs.
Risks: If the debt is genuinely disputed, the company can apply to set aside the demand. If the court finds you served the demand improperly or for a disputed debt, you may be ordered to pay the company’s legal costs.
When to use this: Only if the debt is undisputed, liquidated (a specific amount), and the company is still trading.
How ClaimDone Helps
ClaimDone prepares your letter of demand in 60 minutes for a flat fee of $79. You complete a 5-minute intake form, upload your invoice and evidence, and our Proprietary AI Engine drafts a professionally formatted letter citing applicable NSW law. We send it automatically via email and registered post.
If the client still doesn’t pay, ClaimDone can also prepare your NCAT application documents or statutory demand for company debtors. No subscription, no hourly billing, no surprises.
Get your letter of demand prepared and sent automatically
Final Thoughts
Most unpaid invoices in NSW are resolved at the letter of demand stage. Clients pay because they know you’re serious, and they don’t want the cost and stress of a tribunal case.
If they still don’t pay, you have clear options: NCAT for debts under $20,000, Local Court for larger debts, or a statutory demand for company debtors. Each step increases pressure and cost, but also increases your chance of recovery.
The key is to act quickly, keep records, and escalate in a structured way. The longer you wait, the harder it becomes to recover the debt.
Frequently Asked Questions
How long do I have to chase an unpaid invoice in NSW?
You typically have 6 years from the date the debt became due to take legal action in NSW. However, the sooner you act, the better your chance of recovery. Most successful debt recovery happens within 90 days of the invoice due date.
Can I charge interest on an overdue invoice in NSW?
Yes, if your contract or terms of trade include an interest clause. Without a contractual right, you cannot charge interest unless you obtain a court judgment. Once you have a judgment, interest typically accrues automatically.
What if the client disputes the quality of my work?
If the client raises a genuine dispute, you cannot use a statutory demand, and your NCAT or court case will be more complex. You’ll need to prove the work was completed to the agreed standard. If possible, try to resolve the dispute through negotiation or mediation before escalating to a tribunal.
Can I take a client to NCAT if they're in another state?
NCAT only has jurisdiction if the client is in NSW, the contract was performed in NSW, or the contract specifies NSW jurisdiction. If the client is interstate, you may need to file in their state’s tribunal or court.
What happens if I win at NCAT but the client still doesn't pay?
You can enforce the NCAT money order through the NSW Sheriff’s Office. Options include garnishing their bank account, seizing assets, or placing a charge on their property. Enforcement costs are additional and recoverable from the debtor.
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