Client Refuses to Pay Final Invoice in New South Wales: Your Step-by-Step Options

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. One point up front: in New South Wales, a business owed money by a client has a debt claim for the Local Court, not NCAT. NCAT hears consumer claims, which are brought by the consumer, not by the business chasing payment.

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 (court action or, for a company, a statutory demand)

Timing: Send this around day 22-30 after the original due date.

Cost: flat fee with Claim Done (generated and sent by email).

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 in court. 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 small, the court filing fee and your time may not be worth it. Your claim goes to the Local Court of New South Wales: the Small Claims Division for debts up to $20,000, or the General Division for debts over $20,000 up to $100,000.

Step 5: Local Court Small Claims Division (For Debts Up to $20,000)

If the debt is $20,000 or less, you start a claim in the Small Claims Division of the Local Court of New South Wales with a statement of claim, filed through the NSW Online Registry. This applies whether the client is an individual, a sole trader or a company. NCAT is not the place for an unpaid invoice: it hears consumer claims brought by the consumer, not claims by a business chasing its own customer.

Filing fee: Filing fees change each 1 July; check the current fee on the Local Court’s website before you file.

How it works:

1. You file a statement of claim through the NSW Online Registry
2. The claim is served on the client
3. If the client files a defence, the court lists the matter and both parties present evidence
4. The court makes a decision

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

Enforcement: If you win, the court gives judgment. If the client still doesn’t pay, you can enforce the judgment through the Local Court.

Step 6: Local Court General Division (For Debts Over $20,000)

If the debt is over $20,000 and up to $100,000, you file in the General Division of the Local Court of New South Wales. Above $100,000, the claim goes to the District Court.

Filing fee: Filing fees change each 1 July; check the current fee on the Local Court’s website before you file.

Process:

1. File a statement of claim
2. Serve the claim on the defendant
3. The defendant has 28 days to file a defence
4. If they don’t defend, you can apply for default judgment
5. If they do defend, the matter proceeds to mediation or hearing

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: When the debt is over $20,000 and large enough to justify the time and cost.

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

Cost: $97 with Claim Done (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 Claim Done Helps

Claim Done prepares your letter of demand in about 5 minutes for a flat fee. You complete a 5-minute intake form, tell us about your invoice and evidence, and our Programmatic Algorithms draft a professionally formatted letter citing applicable New South Wales law. We send it by email.

If the client still doesn’t pay, Claim Done’s Tribunal Application ($97) drafts a Local Court statement of claim for a New South Wales debt, and Claim Done can also prepare a statutory demand for company debtors. No subscription, no hourly billing, no surprises.

Get your letter of demand prepared and sent by email

Final Thoughts

Clients pay because they know you’re serious, and they don’t want the cost and stress of a court case.

If they still don’t pay, you have clear options: the Local Court’s Small Claims Division for debts up to $20,000, its General Division for debts over $20,000 up to $100,000, 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 New South Wales?

You typically have 6 years from the date the debt became due to take legal action in New South Wales. 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 New South Wales?

Yes, if your contract or terms of trade include an interest clause. Without a contractual right, you can still ask the court for interest up to judgment under s 100 of the Civil Procedure Act 2005 (NSW) for claims of $1,000 or more. Once you have a judgment, interest also runs on the judgment debt.

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 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 going to court.

Can I chase a client who is in another state?

An unpaid invoice is a debt claim, not an NCAT matter, wherever the client lives. If the client is interstate, check whether the claim should be filed in the New South Wales Local Court or in their state’s tribunal or court before you start.

What happens if I win in the Local Court but the client still doesn't pay?

You can enforce the judgment through the Local Court, with enforcement carried out by the New South Wales Sheriff’s Office where needed. Options include garnishing their bank account, seizing assets, or placing a charge on their property. Enforcement costs are additional and recoverable from the debtor.