Unpaid Contractor Invoice: Should You Send a Letter of Demand or Go Straight to Tribunal?

You finished the job. You sent the invoice. The client has gone silent, made excuses, or refused to pay. Now you need to decide: send a letter of demand first, or skip straight to tribunal?

The answer depends on the size of the debt, how quickly you need the money, and whether the client is likely to respond to formal pressure.

When a letter of demand makes sense

A letter of demand is a formal written notice requiring payment within a specified timeframe—typically 7 to 14 days. It sets out the debt clearly and warns of tribunal action if the amount remains unpaid.

Send a letter of demand when:

• The debt is under $3,000 — tribunal filing fees range from $50–$100, but a letter often resolves the matter without filing
• The client is a legitimate business — registered companies and established traders typically respond to formal legal correspondence
• You have an ongoing relationship — a letter preserves the possibility of future work while applying pressure
• The client has been responsive but evasive — “I’ll pay next week” repeated for months means they need a deadline
• You want to avoid tribunal entirely — many contractors recover the full amount after sending a properly drafted demand

A letter of demand works because it shifts the dynamic. Your client now knows you are serious and that tribunal action is the next step. For most debtors, that is enough to trigger payment.

When to skip the letter and file at tribunal immediately

In some situations, a letter of demand wastes time. The client has already shown they will not pay voluntarily, or the delay risks losing the money entirely.

Go straight to tribunal when:

• The client has disappeared — no response to emails, phone disconnected, business premises closed
• The debt is large — if you are owed $10,000 or more, the tribunal filing fee is a small cost compared to the risk of further delay
• The client is insolvent or about to be — if the business is clearly failing, file immediately to get your claim on record
• You have already sent multiple reminders — if you have chased payment for months, another letter will not change the outcome
• The limitation period is approaching — most contract debts have a six-year limitation period, but if you are close to that deadline, file now
• The client has explicitly refused to pay — “I’m not paying because the work was defective” or “Sue me” means negotiation is over

Filing at tribunal does not mean you give up on settlement. But filing immediately puts you in control of the timeline.

The cost comparison

Letter of demand:

• Claim Done prepares and sends it by email
• No tribunal filing fee
• Turnaround: draft in about five minutes, sent once you approve it
• If successful, you recover the debt within 7–14 days
• If unsuccessful, you still need to file at tribunal

Tribunal application:

• Filing fees vary by state and claim amount (typically $50–$500)
• Claim Done prepares the application documents for $97
• Turnaround: draft in about five minutes, then you check it and file with the tribunal
• Hearing waiting times vary by tribunal
• If successful, you get an enforceable order

The total cost of a letter followed by tribunal is around $300–$700. The cost of going straight to tribunal is $250–$700. The difference is small, but the time difference can be significant.

The time comparison

Letter of demand timeline:

• Day 1: Letter drafted and sent
• Day 7–14: Deadline for payment
• Day 15–21: If unpaid, prepare and file tribunal application
• Day 60–90: Tribunal hearing
• Total time to judgment: depends on the tribunal’s waiting times

Straight to tribunal timeline:

• Day 1: Application prepared and filed
• Day 7–14: Respondent served
• Day 60–90: Tribunal hearing
• Total time to judgment: depends on the tribunal’s waiting times

The time saved by skipping the letter is typically 2–3 weeks. Those weeks matter if the client is about to close the business, move interstate, or dissipate assets.

What the law says about unpaid contractor invoices

When a client refuses to pay for work you have completed, they are in breach of contract. The contract does not need to be written—an email exchange, a quote acceptance, or even a verbal agreement is enforceable.

Your legal entitlements typically include:

• The invoice amount — the agreed price for the work performed
• Interest — you can claim interest from the due date under state civil procedure legislation
• Debt recovery costs — reasonable costs of recovering the debt, including tribunal filing fees

You do not need to prove the client had the money to pay. You only need to prove the contract existed, you performed the work, and the client has not paid.

How to decide: the contractor’s decision tree

Step 1: Is the debt under $3,000 and the client still in business?

• Yes → Send a letter of demand
• No → Go to Step 2

Step 2: Have you already sent multiple payment reminders over 60+ days?

• Yes → File at tribunal
• No → Go to Step 3

Step 3: Is the client a registered company or established business?

• Yes → Send a letter of demand
• No → Go to Step 4

Step 4: Is the client showing signs of insolvency (closed premises, disconnected phone, bounced emails)?

• Yes → File at tribunal immediately
• No → Send a letter of demand

Step 5: Are you within 12 months of the six-year limitation period?

• Yes → File at tribunal
• No → Send a letter of demand

This decision tree prioritises speed and cost-effectiveness. If you are unsure, the letter of demand is the safer first step—it costs less, preserves relationships, and often recovers the debt without tribunal involvement.

What happens after you send a letter of demand

Once the letter is sent, three outcomes are possible:

1. The client pays in full — most common outcome for legitimate businesses
2. The client proposes a payment plan — you can accept or counter-propose
3. The client ignores the letter or refuses to pay — you file at tribunal

If the client disputes the debt, do not argue by email. Their dispute will be dealt with at the tribunal hearing. Gather evidence: the contract, correspondence, proof of work completed, photos, timesheets, and any other documents supporting your claim.

What happens after you file at tribunal

Once you file, the tribunal serves the application on the respondent. They typically have 14–28 days to file a defence. If they do not file a defence, you can apply for a default judgment without a hearing.

If they do file a defence, the tribunal will schedule a hearing. Both parties attend, present evidence, and the tribunal member makes a binding decision. Most hearings last 30–60 minutes.

If you win, the tribunal issues an order requiring the respondent to pay. If they still do not pay, you can enforce the order through wage garnishment, property seizure, or bankruptcy proceedings.

How Claim Done helps contractors recover unpaid invoices

Claim Done prepares both letters of demand and tribunal applications using our Programmatic Algorithms.

For a letter of demand:

• Complete a 5-minute intake form about the unpaid invoice
• The system drafts a professionally formatted letter
• Claim Done sends the letter by email
• Flat fee: , done in about 5 minutes

For a tribunal application:

• Tell us about the contract, invoice, and correspondence
• The system drafts your application (for a New South Wales debt, a Local Court statement of claim) and a witness statement
• You attach your own evidence and lodge the tribunal’s or court’s form yourself
• Flat fee: $97, done in about 5 minutes

Both services are available Australia-wide. Claim Done does not give legal advice, but for straightforward unpaid invoices, the documents it generates are sufficient to recover your money without paying hourly legal fees.

Recover your unpaid invoice now

For most contractors, the letter of demand is the right first step. It costs less than tribunal filing and preserves the option of tribunal action if the client does not pay.

Skip the letter and file at tribunal immediately if the client has disappeared, the debt is large, or you have already wasted months chasing payment.

Every week you delay is another week the client has to move money, close the business, or forget about the debt. Contractors who recover unpaid invoices take formal action early.

If you are ready to send a letter of demand, Claim Done can prepare and send it in about 5 minutes for a flat fee.

Frequently Asked Questions

Can I send a letter of demand myself without using a service?

Yes, but a poorly drafted letter can weaken your position. If the letter does not specify the debt clearly or set a reasonable deadline, the client may ignore it. A professionally drafted letter signals you are serious and understand your legal rights.

What if the client disputes the quality of my work after I send a letter of demand?

Do not argue by email. If they genuinely dispute the debt, the tribunal will decide. Gather evidence showing you completed the work to the agreed standard: photos, correspondence, the original quote, and any sign-off or approval from the client.

How long does a tribunal hearing take for an unpaid contractor invoice?

Waiting times for a hearing vary by tribunal. If the respondent does not file a defence, you can apply for a default judgment without attending a hearing.

Can I claim interest on an unpaid contractor invoice?

Yes. Under state civil procedure legislation, you can typically claim interest from the due date. The rate varies by state but is usually around 10% per year. Include the interest calculation in your letter of demand or tribunal application.

What if the client is an individual, not a business?

The same process applies. Individuals can be sued at tribunal for unpaid contractor invoices. However, individuals are more likely to ignore formal letters, so if you have already sent reminders and received no response, file at tribunal immediately.