What to Do When a Customer Refuses to Pay After You’ve Done the Work

You finished the job. You sent the invoice. Now you are chasing payment for the third time and getting nowhere.

This guide shows tradies, contractors, and service providers exactly what to do at each stage — from the first polite follow-up to formal tribunal action.

Send a polite payment reminder first

Before escalating, give the customer one chance to pay without conflict. People miss invoices. Payment systems fail. Bank accounts run dry temporarily.

Send a short, polite email or text:

• Reference the invoice number and amount
• Attach the invoice again
• Ask if there is any issue preventing payment
• Set a clear deadline (typically 7 days)

Keep the tone neutral. If they respond with a genuine dispute about the quality of work, you may need to resolve that before chasing payment. If they ignore you or make excuses, move to the next step.

Follow up with a firmer reminder

If the polite reminder gets no response or produces vague promises, send a second message with a firmer tone:

• State that payment is now overdue
• Specify the exact amount owed
• Set a final deadline (typically 7 more days)
• Mention that you will take formal action if payment is not received

You are establishing a paper trail. If this ends up in a tribunal, the magistrate will see that you gave fair warning.

Check your contract and terms

Before you escalate further, review what you agreed to in writing:

• Did you have a written quote or contract?
• What were the payment terms?
• Did you complete the work as specified?
• Are there any penalty clauses for late payment?

If you did not have anything in writing, you can still recover payment. But having a signed agreement makes your case stronger.

Send a formal letter of demand

A letter of demand is the standard first step in formal debt recovery. It tells the customer you are serious and gives them one final chance to pay before legal action.

A proper letter of demand includes:

• Your details and the customer’s details
• A clear statement of the debt (amount, invoice number, date of work)
• The legal basis for the claim
• A final deadline (typically 7 days)
• A statement that you will commence tribunal proceedings if payment is not received

Send the letter by registered post or email with delivery confirmation. Keep proof of delivery.

Most people pay after receiving a formal letter. It signals that you are not going away and that legal action is imminent. It also satisfies the tribunal’s requirement that you attempted to resolve the dispute before filing.

ClaimDone generates a legally precise letter of demand based on your evidence and sends it automatically for a flat $79 fee.

Consider your legal options

If the letter of demand is ignored, you have three main options:

Small claims tribunal For debts under the tribunal limit in your state (typically $10,000 to $25,000), this is the fastest and cheapest option. No lawyers required. Low filing fees. Decisions are usually made within 3-6 months.

Magistrates or District Court For larger debts, you file in a higher court. This process is slower and more formal, and you may need legal representation.

Statutory demand (for company debtors only) If the customer is a registered company and owes $4,000 or more, you can serve a statutory demand. This gives them 21 days to pay or face wind-up proceedings. It is the most aggressive option and should only be used when the debt is undisputed.

For most tradies and service providers, the tribunal is the right path.

File a tribunal application

Each state has a small claims tribunal with a different name and slightly different rules:

• NSW: NSW Civil and Administrative Tribunal (NCAT)
• VIC: Victorian Civil and Administrative Tribunal (VCAT)
• QLD: Queensland Civil and Administrative Tribunal (QCAT)
• WA: Magistrates Court (Small Claims Division)
• SA: South Australian Civil and Administrative Tribunal (SACAT)
• TAS: Magistrates Court (Small Claims Division)
• ACT: ACT Civil and Administrative Tribunal (ACAT)
• NT: Local Court (Small Claims Division)

The process is similar across all states:

1. Complete the application form (available online)
2. Pay the filing fee (typically $50-$300 depending on the claim amount)
3. Attach your evidence (invoice, contract, photos, correspondence)
4. Serve the application on the customer
5. Attend the hearing

You do not need a lawyer. The tribunal is designed for ordinary people to represent themselves.

Bring everything that proves you did the work and the customer agreed to pay:

• The original quote or contract
• Signed acceptance or email confirmation
• Invoices
• Photos of the completed work
• Text messages or emails about the job
• Any correspondence about payment
• Bank statements showing no payment received

What happens at the tribunal hearing

Tribunal hearings are informal. You sit at a table with the magistrate and the other party.

The magistrate will ask you to explain your case. Speak plainly:

• When and how you were engaged
• What work you agreed to do
• What you actually did
• When you invoiced
• What attempts you made to get paid

The customer will then give their side. They may claim the work was defective, incomplete, or not what they ordered. Be ready to respond calmly with evidence.

The magistrate will typically make a decision on the day or within a few weeks. If you win, you get a tribunal order requiring the customer to pay.

Enforcing the tribunal order

Winning the case is not the same as getting paid. If the customer still refuses to pay, you need to enforce the order.

Enforcement options include:

• Garnishee order: Takes money directly from their bank account or wages
• Warrant for seizure and sale: Allows a sheriff to seize and sell their assets
• Examination summons: Forces them to attend court and disclose their financial situation

Enforcement costs extra and takes time, but it is often the only way to recover payment from a determined non-payer.

When to get a lawyer

Most unpaid invoice cases are straightforward and do not need a lawyer. But consider getting legal advice if:

• The debt is over $25,000
• The customer is alleging serious defects or breach of contract
• There are complex contractual terms or disputes about scope of work
• The customer has filed a counterclaim against you
• You are facing a statutory demand or insolvency proceedings

ClaimDone does not provide legal advice. For complex or high-value disputes, consult a qualified Australian lawyer.

How ClaimDone helps tradies and service providers

ClaimDone is built for situations like this. You upload your invoice, contract, and any other evidence. The Proprietary AI Engine reads it, drafts a legally precise letter of demand, and sends it automatically.

If the letter does not work and you need to go to tribunal, ClaimDone can also prepare your tribunal application with all the supporting documents formatted correctly.

Flat fees. No subscription. Fast turnaround. Australia-wide.

For future jobs, use a proper service agreement to avoid payment disputes before they start.

Take action now

If a customer refuses to pay after you have done the work, follow the escalation path. Document everything. Use the tribunal system. Most cases settle before the hearing once the customer realises you are serious.

Do not let unpaid invoices pile up. Start your letter of demand now — $79 flat fee, done in 60 minutes.

Frequently Asked Questions

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

Send a polite reminder 7 days after the invoice is due. If that is ignored, send a firmer follow-up after another 7 days. If you still get no response or payment, send a formal letter of demand. The entire process should take no more than 3-4 weeks from the original due date.

Can I charge interest on an overdue invoice?

Yes, if your contract or terms and conditions include an interest clause. The rate must be reasonable (typically up to 10% per annum). If you did not specify interest in your agreement, you cannot add it retrospectively, but you can typically claim interest from the date of the tribunal order.

What if the customer claims the work was defective?

If the customer raises a genuine dispute about quality, you may need to resolve that before recovering payment. Offer to inspect the work or provide evidence that it meets the agreed standard. If the dispute is not genuine and they are just avoiding payment, note their complaint in your tribunal application and bring evidence that the work was completed properly.

Do I need a written contract to recover payment?

No. A verbal agreement is still enforceable under Australian law. However, a written contract makes your case much stronger because it proves what was agreed. If you do not have a written contract, gather any evidence of the agreement such as text messages, emails, quotes, or invoices that show the customer accepted your terms.

How much does it cost to file a tribunal application?

Filing fees vary by state and claim amount, but typically range from $50 to $300. Most tribunals have an online fee calculator. If you win, you can usually claim the filing fee back as part of your costs. The tribunal process is designed to be affordable for small businesses and individuals.