Unpaid Invoice Over 90 Days: What to Do Before You Hire a Debt Collector

An invoice unpaid for 90 days is a bad debt. The debtor will not pay without pressure. Most Australian businesses assume the next step is hiring a debt collection agency, which typically charges 15–40% of the recovered amount plus upfront fees.

Before you hand over a third of your money, try three cheaper alternatives: a final demand letter, a statutory demand (if the debtor is a company), or a tribunal application. Each costs under $200 and has a strong track record of recovering debts without a third party.

Why 90 Days Matters

Ninety days is the informal threshold where a debt moves from “overdue” to “seriously overdue.” Most accounting systems flag invoices at 30, 60, and 90 days. By day 90, you have likely sent multiple reminders, made phone calls, and received excuses.

The debtor either cannot pay or will not pay. Gentle reminders will not work. You need formal legal pressure.

The Australian Taxation Office treats debts over 90 days as potentially unrecoverable for tax purposes. Banks and lenders treat them as high-risk. If you are waiting for payment to cover your own bills, 90 days is too long.

Option 1: Final Demand Letter

A final demand letter is the last formal notice before legal action. It explicitly states that if payment is not received within a set timeframe (typically 7–14 days), you will commence tribunal proceedings, issue a statutory demand, or engage a debt collector.

The letter references the original invoice, payment terms, and the total amount owed (including any interest or late fees if your terms allow). It states the exact consequence of non-payment.

Unlike a polite reminder, a final demand is formal, direct, and legally precise. It signals that you are serious and prepared to take the next step.

Claim Done prepares and sends a final demand letter for $49. The letter is drafted based on the evidence you describe (invoice, contract, payment terms, prior correspondence), formatted to Australian legal standards, and delivered by email. It is drafted in about 5 minutes.

There is no commission to pay. Many debtors pay immediately when they realise legal action is imminent.

Option 2: Statutory Demand (Company Debtors Only)

If the debtor is a registered company (Pty Ltd or Ltd) and the debt is $4,000 or more, a statutory demand is the most powerful debt recovery tool available. It gives the company 21 days to pay or face wind-up proceedings.

You serve the company with the statutory demand form and a supporting affidavit verifying the debt. The company has three options:

1. Pay the debt in full within 21 days
2. Apply to set aside the demand (only possible if the debt is genuinely disputed or there is a defect in the form)
3. Do nothing — in which case you can apply to wind up the company

Directors do not want their company wound up over an unpaid invoice, and the threat of insolvency is real.

Requirements

The debt must be:

• At least $4,000 — the statutory minimum
• Owed by a registered company — check the ABN lookup or ASIC register
• Liquidated — a specific, ascertained amount (not estimated damages)
• Undisputed — do not use a statutory demand if the company has a genuine dispute about the amount or liability

The form must be correct. Any defect in the statutory demand can be grounds for the company to apply to set it aside.

Claim Done prepares the statutory demand form and supporting affidavit template for $97. You swear the affidavit before a JP or solicitor, then serve it on the company. It is drafted in about 5 minutes.

This is significantly cheaper than a debt collector and far more effective. A statutory demand is not a suggestion — it is a legal process with serious consequences.

Option 3: Tribunal Application

If the debt is under the tribunal threshold in your state (typically $10,000–$25,000), you can file a claim in your state’s civil tribunal (in New South Wales, a business debt goes to the Local Court, not NCAT: the Small Claims Division up to $20,000 and the General Division over $20,000 up to $100,000). Tribunals are designed for small claims, operate without lawyers, and charge minimal filing fees (usually $50–$200 depending on the claim amount).

The tribunal process is simple, fast, and enforceable. You file a claim, the debtor is served, and a hearing is scheduled. At the hearing, you present your evidence (invoice, contract, correspondence), and the tribunal makes a binding decision.

Once you have a tribunal order, you can enforce it through wage garnishment, bank account seizure, or property liens. The debtor cannot ignore a tribunal order without serious consequences.

Filing fees vary by state and claim amount. Claim Done drafts your tribunal application (for a New South Wales debt, a Local Court statement of claim) and a witness statement for $97. It is drafted in about 5 minutes. You file the documents yourself with the tribunal (most states now accept online filing).

This is cheaper than a debt collector and gives you a legally enforceable outcome.

Debt Collectors: When They Make Sense

Debt collection agencies charge 15–40% of the recovered amount, plus upfront fees in some cases. They are useful in specific situations:

• The debtor is evasive, unresponsive, or has moved interstate
• The debt is large enough that losing 30% still leaves you with a worthwhile recovery
• You do not have time to manage the recovery process yourself
• The debtor is a high-risk individual with a history of non-payment

For most unpaid invoices over 90 days, a final demand, statutory demand, or tribunal application is faster, cheaper, and more effective.

How Claim Done Helps

Claim Done prepares the legal documents you need to recover an unpaid invoice without hiring a debt collector. Tell us about your invoice, contract, and any correspondence. Our Programmatic Algorithms work from your answers, draft the appropriate document (final demand, statutory demand, or tribunal application), and deliver it in about 5 minutes.

Flat fees. No subscription. Australia-wide.

• Final demand letter: flat fee — drafted and sent by email
• Statutory demand: $97 — form and affidavit template prepared
• Tribunal application: $97 — full application pack for you to check and file yourself

FAQ

Can I charge interest on an invoice that is 90 days overdue?

Yes, if your original invoice or contract included terms allowing for interest on late payments. The rate must be reasonable (typically the RBA cash rate plus a margin). If your terms did not specify interest, you cannot add it retrospectively.

What if the debtor disputes the invoice after 90 days?

If the dispute is genuine (e.g., defective goods, incomplete service), you may need to negotiate or provide evidence that the work was completed to standard. If the dispute is raised only after you issue a final demand or statutory demand, it is often a delaying tactic. Document everything and proceed with tribunal if necessary.

How long does a statutory demand take to work?

The company has 21 days to pay or apply to set aside the demand. If they do not, you can apply to wind up the company, which usually prompts immediate payment.

Can I use a final demand for a debt under $4,000?

Yes. A final demand works for any amount. A statutory demand requires a minimum debt of $4,000 and a company debtor, but a final demand has no minimum and works for individuals and companies.

What happens if the debtor ignores my tribunal application?

If the debtor does not file a response or attend the hearing, the tribunal will usually make a default order in your favour. You can then enforce that order through wage garnishment, bank account seizure, or property liens.

Take Action Now

If you have been waiting 90 days for payment, waiting longer will not help. A final demand letter costs $49 and is drafted in about 5 minutes. Prepare your final demand letter in about 5 minutes and stop leaving money on the table.

Frequently Asked Questions

Can I charge interest on an invoice that is 90 days overdue?

Yes, if your original invoice or contract included terms allowing for interest on late payments. The rate must be reasonable (typically the RBA cash rate plus a margin). If your terms did not specify interest, you cannot add it retrospectively.

What if the debtor disputes the invoice after 90 days?

If the dispute is genuine (e.g., defective goods, incomplete service), you may need to negotiate or provide evidence that the work was completed to standard. If the dispute is raised only after you issue a final demand or statutory demand, it is often a delaying tactic. Document everything and proceed with tribunal if necessary.

How long does a statutory demand take to work?

The company has 21 days to pay or apply to set aside the demand. If they do not, you can apply to wind up the company, which usually prompts immediate payment.

Can I use a final demand for a debt under $4,000?

Yes. A final demand works for any amount. A statutory demand requires a minimum debt of $4,000 and a company debtor, but a final demand has no minimum and works for individuals and companies.

What happens if the debtor ignores my tribunal application?

If the debtor does not file a response or attend the hearing, the tribunal will usually make a default order in your favour. You can then enforce that order through wage garnishment, bank account seizure, or property liens.