Can You Issue a Statutory Demand for Unpaid Invoices?

You sent an invoice. The company hasn’t paid. You’ve chased, emailed, called — nothing. Now you’re wondering whether you can escalate to a statutory demand.

Yes, if the debt is $4,000 or more and the debtor is a registered company. But just because you can doesn’t mean you should. A statutory demand starts a 21-day countdown to potential wind-up proceedings. Used correctly, it forces payment fast. Used carelessly, it wastes time and money.

What is a statutory demand?

A statutory demand is a formal notice issued under the Corporations Act demanding payment of a debt within 21 days. If the company doesn’t pay, apply to set it aside, or enter into a genuine dispute, you can file a wind-up application in the Federal Court or Supreme Court.

It’s not a court application. It’s a standalone document supported by an affidavit verifying the debt. You serve it on the company’s registered office, and the clock starts.

The threat is real. Most companies pay within 21 days rather than risk liquidation.

The $4,000 threshold

You cannot issue a statutory demand for less than $4,000. This threshold applies to the total debt owed, not per invoice.

If you’re owed $3,800, you cannot use a statutory demand. If you’re owed three invoices totalling $5,200, you can.

The threshold prevents trivial debts from triggering insolvency proceedings. Wind-up applications are expensive and court-intensive. The $4,000 minimum ensures the process is reserved for substantial debts.

Debt under $4,000? Use a letter of demand instead. It’s faster, cheaper, and often just as effective for smaller amounts.

Company debtor only

A statutory demand can only be issued to a registered company — a Pty Ltd or Ltd entity registered with ASIC. You cannot serve one on:

• A sole trader
• An individual (even if they trade under a business name)
• A partnership
• A trust (unless the trustee is a company)

Check the debtor’s ABN or ACN on the ASIC register before proceeding. If the entity is not a registered company, a statutory demand will fail.

Debtor is a sole trader? Issue a letter of demand, then file in the relevant tribunal if the debt is under the tribunal’s monetary limit. For larger debts, file in the Magistrates Court or District Court.

When a statutory demand is the right move

Use a statutory demand when:

The debt is clear and undisputed. You sent an invoice, the work was done or goods delivered, and the company has not raised any genuine issue with quality, quantity, or entitlement. If there’s a real dispute about whether the debt is owed, a statutory demand will likely be set aside.

The company is ignoring you. You’ve sent reminders, made calls, issued a letter of demand — nothing. A statutory demand escalates the pressure immediately. The 21-day deadline often triggers a response where softer methods failed.

The debt is substantial. For debts well above $4,000, the cost of preparing a statutory demand (typically $200-$300 including the affidavit) is proportionate. For a $4,200 debt, a letter of demand and tribunal application might be faster.

You’re prepared to follow through. A statutory demand is not a bluff. If the company doesn’t pay and you’re not willing to file a wind-up application, don’t issue one.

The company is solvent but slow-paying. Statutory demands work best against companies that can pay but choose not to. If the company is genuinely insolvent, a statutory demand may trigger voluntary administration or liquidation — which means you join the queue of creditors and may recover nothing.

When a statutory demand is overkill

Don’t use a statutory demand if:

The debt is under $4,000. Use a letter of demand and tribunal application instead.

The debt is genuinely disputed. If the company has raised a legitimate issue — defective goods, incomplete work, overcharging — a statutory demand will be set aside. You’ll need to resolve the dispute first.

The debtor is an individual or sole trader. A statutory demand only works against companies.

You’re not ready to escalate. If you’re hoping the statutory demand alone will scare them into paying, and you have no intention of filing a wind-up application, don’t issue one.

The company is clearly insolvent. If the company is already in administration, liquidation, or receivership, a statutory demand is pointless. You’ll need to lodge a proof of debt with the administrator or liquidator instead.

How to issue a statutory demand for unpaid invoices

1. Verify the debt

Confirm the total amount owed, including any interest or costs if your contract or terms allow it. Gather all supporting documents — invoices, delivery dockets, signed contracts, payment terms, correspondence.

2. Prepare the statutory demand form

The prescribed form must include:

• The creditor’s details (your name or company name)
• The debtor company’s ACN and registered office
• The total debt amount
• A breakdown of the debt (invoice numbers, dates, amounts)
• A statement that the debt is due and payable
• The 21-day payment deadline

3. Prepare the supporting affidavit

An affidavit verifying the debt must accompany the statutory demand. It must be sworn before a Justice of the Peace, solicitor, or other authorised person. The affidavit confirms the debt is owed, the amount is correct, there is no genuine dispute, and the company has not paid.

4. Serve the statutory demand

The statutory demand must be personally served on the company at its registered office, or served on a director or company secretary. You cannot serve it by email or post unless the company consents in writing.

Use a process server or solicitor to ensure proper service. Keep proof of service — you’ll need it if you proceed to a wind-up application.

5. Wait 21 days

The company has 21 days from the date of service to pay the debt in full, apply to set aside the statutory demand, or enter into a payment arrangement if you agree.

If the company does nothing, you can file a wind-up application. If they apply to set it aside, the matter goes to court, and you’ll need to prove the debt is valid and undisputed.

What happens if the company doesn’t pay?

If 21 days pass and the company has not paid or applied to set aside the demand, you can file an application to wind up the company in the Federal Court or Supreme Court.

This is expensive — court filing fees, legal costs, and the risk that the company is insolvent and you recover nothing. But the threat alone is often enough. Many companies pay within the 21-day window to avoid the risk of liquidation.

If the company is wound up and liquidated, you become an unsecured creditor. You’ll lodge a proof of debt with the liquidator, and any available funds are distributed according to priority rules. Secured creditors and employee entitlements are paid first. Unsecured creditors often recover cents in the dollar, or nothing.

This is why a statutory demand is most effective against solvent companies that are simply slow-paying or difficult.

Alternatives to a statutory demand

If a statutory demand isn’t right for your situation, consider:

Letter of demand. Fast, cheap, effective for debts under $4,000 or against non-company debtors. ClaimDone generates and sends one automatically for $79.

Tribunal application. For debts under the tribunal’s monetary limit (typically $10,000-$25,000 depending on the state), file in VCAT, NCAT, QCAT, or the equivalent. No lawyers required, low filing fees, fast resolution.

Court proceedings. For debts above the tribunal limit, file in the Magistrates Court or District Court. More formal, higher costs, but necessary for larger claims.

Debt collection agency. For smaller debts or where you don’t want to manage the process yourself, a collection agency can chase payment on a commission basis.

How ClaimDone helps with statutory demands

ClaimDone prepares the statutory demand form and supporting affidavit template for $197. You complete a 5-minute intake form, upload your invoices and evidence, and our Proprietary AI Engine drafts the statutory demand.

You receive:

• Completed statutory demand form ready for service
• Affidavit template ready to be sworn
• Step-by-step service instructions
• Guidance on what happens next

All done in 60 minutes. Flat fee, no subscription, Australia-wide.

For debts under $4,000, or where the debtor is not a company, use ClaimDone’s letter of demand service instead — $79, automatically sent to the debtor.

Ready to issue a statutory demand?

A statutory demand is the most powerful debt recovery tool in Australia, but it’s not for every unpaid invoice. Use it when the debt is over $4,000, the debtor is a registered company, the debt is clear and undisputed, and you’re prepared to follow through.

For smaller debts, disputed amounts, or non-company debtors, a letter of demand or tribunal application is faster and cheaper.

If you’re ready to issue a statutory demand, prepare your statutory demand in 60 minutes for $197. If you’re not sure whether a statutory demand is right for your situation, start with a letter of demand for $79.

Frequently Asked Questions

Can I issue a statutory demand for a debt under $4,000?

No. The Corporations Act sets a minimum debt threshold of $4,000 for statutory demands. If your debt is less than $4,000, use a letter of demand or file a tribunal application instead.

Can I serve a statutory demand on a sole trader?

No. Statutory demands can only be issued to registered companies (Pty Ltd or Ltd entities). For sole traders, individuals, or partnerships, use a letter of demand and tribunal or court proceedings.

What happens if the company disputes the debt after I serve a statutory demand?

The company can apply to set aside the statutory demand within 21 days if there’s a genuine dispute about the debt. If they succeed, the demand is set aside and you’ll need to resolve the dispute through negotiation or court proceedings.

How much does it cost to issue a statutory demand?

Preparing the statutory demand and affidavit typically costs $200-$300. ClaimDone prepares both for $197. You’ll also need to pay for service (typically $100-$200 for a process server) and potentially legal costs if the matter proceeds to court.

Can I issue a statutory demand for multiple unpaid invoices?

Yes, as long as the total debt is $4,000 or more. You can combine multiple invoices in a single statutory demand, provided they’re all owed by the same company and are all due and payable.