Chasing Unpaid Invoices as a Freelancer: Letter of Demand or Tribunal?

You finished the project. You sent the invoice. The client went quiet. Now you are sitting on unpaid money that was supposed to cover rent, supplies, or the next job. This is the single most common problem freelancers and sole traders face in Australia.

The question is not whether you have a right to be paid. The question is what to do next: send a letter of demand, file a tribunal application, or walk away.

Why clients do not pay

Before you decide how to chase the debt, understand why the client has not paid. The strategy changes depending on the reason.

Cash flow problems — the client wants to pay but does not have the money right now. A letter of demand with a payment plan offer often works.

Dispute over quality or scope — the client claims the work was not what they expected. This typically requires tribunal evidence.

Disorganisation — the invoice got lost or the client forgot. A polite reminder usually fixes this.

Bad faith — the client never intended to pay. This requires escalation.

If the client is ignoring you completely and the debt is clear-cut, a letter of demand is the fastest first step. If the client is actively disputing the work, prepare for tribunal from the start.

What a letter of demand does

A letter of demand is a formal written notice that you are owed money and that you intend to take further action if it is not paid. It is not a court document. It is not legally binding. But it works because it signals you are serious.

Under Australian contract law, you are entitled to payment for work performed under an agreement — whether that agreement was written, verbal, or implied by conduct. A letter of demand restates that entitlement and sets a deadline for payment, typically 7 to 14 days.

Most freelancers see results after sending one. The client either pays in full, offers a payment plan, or responds with a reason for non-payment. Even if they dispute the debt, you now have a clear record of their position.

What goes in a freelancer’s letter of demand:

• The amount owed, broken down by invoice number and date
• A brief description of the work performed
• Reference to the original agreement (quote, email, contract, or terms of service)
• A payment deadline (7 to 14 days from the date of the letter)
• A statement that you will take further action if payment is not received
• Your preferred payment method and contact details

The tone should be firm but professional. You are stating facts and setting expectations.

When a letter of demand is the right move

A letter of demand works best when:

• The debt is under $10,000 and the client is not disputing the work
• You have a clear paper trail (invoice, quote, email confirmation, or signed agreement)
• The client has been unresponsive but has not outright refused to pay
• You want to resolve the matter quickly without tribunal fees or waiting times
• The client is a sole trader or small business, not a large company with a legal team

If the client responds — even if they cannot pay in full immediately — you can negotiate a payment plan or settlement without going further. This saves time and keeps the relationship salvageable if you need to work with them again.

When to skip the letter and go straight to tribunal

Sometimes a letter of demand is a waste of time. If any of these apply, consider filing a tribunal application immediately:

• The client has already told you they will not pay
• The debt is over $10,000 and the client has assets or income to enforce against
• The client is disputing the work and you need a tribunal to decide who is right
• You have already sent multiple reminders and a final demand with no response
• The client is a company and you suspect they may wind up or go into liquidation

Tribunal and court claims take longer and cost more upfront (filing fees change each 1 July; check the current fee on the tribunal’s or court’s website before you file), but they result in a legally enforceable order. If you win, the client must pay or face enforcement action.

How tribunal and court claims work for freelancers

Each state and territory has a tribunal or court that handles small money claims:

• New South Wales — Local Court of NSW (Small Claims Division up to $20,000; General Division over $20,000 up to $100,000). Not NCAT: a freelancer owed money has a debt claim, and NCAT only hears consumer claims brought by the consumer
• Victoria — Victorian Civil and Administrative Tribunal (VCAT), Civil Claims List
• Queensland — Queensland Civil and Administrative Tribunal (QCAT), minor civil disputes up to $25,000
• Western Australia — Magistrates Court of WA (minor case claims up to $10,000; general procedure claims up to $75,000)
• South Australia — Magistrates Court of SA (minor civil action up to $12,000; general claims up to $100,000)
• Tasmania — Magistrates Court (Civil Division)
• Australian Capital Territory — ACT Civil and Administrative Tribunal (ACAT), civil disputes up to $25,000
• Northern Territory — NT Civil and Administrative Tribunal (NTCAT), small claims up to $25,000

The process is similar across states:

1. File an application with the tribunal, or a statement of claim with the court, including your evidence (invoices, contracts, emails, proof of delivery)
2. Pay the filing fee
3. The application or claim is served on the client
4. The client has a set period to file a response
5. The matter is listed for a hearing
6. You present your case — no lawyers required
7. The tribunal or court makes an order

If you win, the order requires the client to pay the amount the tribunal or court awards. If they do not pay voluntarily, you can enforce the order through garnishment, property seizure, or bankruptcy proceedings.

The cost-benefit calculation

Tribunal applications cost time and money. Weigh the debt amount against the effort required to recover it.

For debts under $2,000 — a letter of demand is almost always the better option. Even if you win at tribunal, enforcement can be difficult if the client has no assets.

For debts between $2,000 and $10,000 — send a letter of demand first. If the client ignores it or disputes the debt, escalate to tribunal.

For debts over $10,000 — consider whether the client has the ability to pay. If they are a registered company, a statutory demand may be more effective than a tribunal application.

If the client is genuinely broke, no legal process will extract money that does not exist. Sometimes the best decision is to write off the debt, learn from the experience, and tighten your payment terms for future clients.

Practical tips for freelancers chasing unpaid invoices

Keep records from day one — save every email, quote, contract, invoice, and proof of delivery. If you end up in tribunal, this is your evidence.

Set clear payment terms upfront — specify due dates, late fees, and payment methods in your quote or contract. “Payment on completion” is not clear enough.

Send reminders before escalating — a polite email or phone call often resolves the issue without formal action.

Do not work for free while chasing payment — if a client owes you money and asks for more work, say no until the debt is cleared.

Consider upfront deposits — for new clients or large projects, ask for 30% to 50% upfront. This reduces your exposure if they do not pay the final invoice.

Know when to walk away — if the debt is small, the client is broke, and enforcement would cost more than the debt itself, sometimes the best move is to cut your losses and move on.

How Claim Done helps freelancers recover unpaid invoices

Claim Done generates both letters of demand and tribunal applications for freelancers Australia-wide. You tell us what evidence you have (invoices, contracts, emails), answer a few questions, and our Programmatic Algorithms draft a legally precise document.

For a letter of demand, Claim Done prepares and sends the letter by email — no ongoing fees, no subscription. The letter is formatted professionally and includes a clear payment deadline.

If the client does not respond and you need to escalate, Claim Done’s Tribunal Application ($97) drafts your application and supporting documents for your state’s tribunal or court, including a Local Court statement of claim for a New South Wales debt.

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

Recover your unpaid invoices

If you are owed money for work you completed, you have options. A letter of demand is fast, cheap, and effective for most freelancer disputes. If the client ignores it, a tribunal application gives you a legally enforceable order.

Claim Done handles both. Tell us what evidence you have, answer a few questions, and get your letter of demand drafted in about 5 minutes, and sent once you approve it — or prepare your tribunal application and a witness statement for you to lodge.

Start recovering your unpaid invoices today with Claim Done’s letter of demand service.

Frequently Asked Questions

Can I send a letter of demand if I do not have a written contract?

Yes. Australian contract law recognises verbal agreements and agreements implied by conduct. If you performed work at the client’s request and they accepted it, you have a contract. Your invoice, emails, and proof of delivery are evidence of the agreement.

What if the client claims the work was not what they wanted?

If the client is disputing the quality or scope of the work, a letter of demand may not resolve the issue. You may need to file a tribunal application and let the tribunal decide whether you met the terms of the agreement. Keep all evidence showing what was agreed and what you delivered.

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

Send at least one polite reminder after the invoice is overdue. If the client does not respond within 7 to 14 days, send a letter of demand. Do not wait months — the longer you wait, the harder it is to recover the debt.

Can I add interest or late fees to the invoice?

Only if your original terms specified late fees or interest. You cannot add them after the fact unless the client agreed to them upfront. If you go to tribunal, you can typically claim interest from the date the debt was due.

What happens if I win at tribunal but the client still does not pay?

You can enforce the tribunal order through garnishment (taking money from their bank account or wages), seizure of assets, or bankruptcy proceedings if the debt is over $10,000. Enforcement costs extra, so consider whether the client has assets worth pursuing.