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 or court, the decision-maker 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 start a tribunal or court claim if payment is not received

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

It signals that you are not going away and that legal action is imminent. It also shows the tribunal or court that you attempted to resolve the dispute before filing.

Claim Done generates a legally precise letter of demand based on your evidence and sends it by email for a flat fee.

Consider your legal options

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

Small claims tribunal or court For debts within the small claims limit in your state (see the list below), this is usually the simplest option. No lawyers required.

Court (larger debts) For debts above the small claims limit, you file in the general side of the court or a higher court. This process is slower and more formal.

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, a small claim in the right tribunal or court is the right path.

File a claim in your state’s tribunal or court

Each state sends small debt claims to a different tribunal or court, with slightly different rules:

• 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 for the Local Court, not NCAT.
• 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 process is similar across all states:

1. Complete the application form or statement of claim (available online)
2. 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)
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. Small claims processes are 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 hearing

Small claims hearings are less formal than ordinary court hearings. You present your case to the tribunal member or magistrate, with the other party there.

The tribunal member or 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 decision may be given on the day or later. If you win, you get an order or judgment requiring the customer to pay.

Enforcing the order or judgment

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.

How Claim Done helps tradies and service providers

Claim Done is built for situations like this. You tell us about your invoice, contract, and any other evidence. Our Programmatic Algorithms work from your answers, draft a legally precise letter of demand, and send it by email.

If the letter does not work and you need to file a claim, Claim Done’s Tribunal Application ($97) can prepare your tribunal application (for a New South Wales debt, a Local Court statement of claim), plus a witness statement.

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 small claims system in your state.

Do not let unpaid invoices pile up. Start your letter of demand now — $49 flat fee, done in about 5 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. If you did not specify interest in your agreement, you cannot add it retrospectively, but a court can still award interest from the date the debt was due at its pre-judgment rate (see your court’s interest rate page).

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 claim 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 or court claim?

Filing fees vary by state, forum and claim amount. Filing fees change each 1 July; check the current fee on the tribunal’s or court’s website before you file. If you win, you can ask for the filing fee as part of your costs.