Unpaid Invoice Over 90 Days: When to Send a Final Demand in Australia

You sent the invoice. You sent a reminder. You sent another reminder. It’s been 90 days, and you still haven’t been paid.

Polite follow-ups are not working. The debtor either cannot pay, will not pay, or is testing how far they can push you. This is when you escalate to a final demand — the last formal step before legal action.

Why 90 days matters

There is no magic number in Australian law that says you must wait 90 days before taking action. You can send a letter of demand the day after an invoice is overdue if your payment terms allow it.

But 90 days is a common commercial threshold. It signals you have given the debtor reasonable time to pay, attempted to resolve the matter informally, and are now prepared to take formal action.

Most businesses use a staged approach: friendly reminder at 7-14 days, formal reminder at 30 days, letter of demand at 60 days, and final demand at 90 days. This demonstrates good faith and strengthens your position if you end up in tribunal.

What a final demand does

A final demand is not just another reminder. It is a formal legal notice that states the exact amount owed (including any interest or late fees), references the original invoice and payment terms, sets a strict deadline (typically 7 days), and warns of specific legal action if payment is not received.

The purpose is to make the debtor understand this is the last opportunity to pay before you file a claim. Many debtors who ignore reminders will pay immediately when they receive a properly drafted final demand.

The escalation timeline

Here is a standard debt recovery timeline for an unpaid invoice:

Day 0: Invoice issued with payment terms (e.g. 14 days, 30 days)

Day 7-14: Friendly reminder email or call

Day 30: Formal reminder stating the invoice is overdue

Day 60: Letter of demand setting 14-day deadline

Day 90: Final demand warning of tribunal or court action within 7 days

Day 97+: File tribunal application or statement of claim

This timeline can be compressed if your payment terms are shorter, or if the debtor has explicitly refused to pay.

When to send a final demand instead of going straight to tribunal

A significant percentage of unpaid invoices are paid after a final demand is sent. The debtor realises you are serious, and paying now is cheaper than defending a tribunal claim.

Sending a final demand also shows the tribunal you attempted to resolve the matter before filing, gives the debtor one last chance to avoid a judgment against them, allows you to add interest and costs to the debt, and provides a clear paper trail if you need to enforce a judgment later.

Smaller debts go to a small claims tribunal or court, and which one depends on your state: a tribunal in Victoria, Queensland, the ACT and the Northern Territory, and a court in New South Wales, Western Australia, South Australia and Tasmania (see the state list below). Whichever applies, a final demand shows you tried to resolve the dispute before filing.

What to include in a final demand

A properly drafted final demand must include:

• Your details: Full legal name, ABN, address
• Debtor’s details: Full legal name (check ABN register if a company), address
• Invoice details: Invoice number, date, amount, payment terms
• Total amount owed: Principal, plus any contractual interest or late fees
• Legal basis: Breach of contract or relevant consumer protection provisions
• Deadline: A specific date (7 days from the date of the letter)
• Consequence: “If payment is not received by [date], I will file a claim in [tribunal name] without further notice”
• How to pay: Bank details, reference number

Do not make threats you cannot follow through on. If you say you will file in tribunal, you must be prepared to do it.

When to move to tribunal or court

If the final demand is ignored, you have three options:

1. File a small claim with your state’s tribunal or court (the forum and limit differ by state; see the list below)
2. File in a higher court or division (debts over the small claims limit, for example the Local Court’s General Division in New South Wales)
3. Serve a statutory demand (if the debtor is a registered company and the debt is over $4,000)

A small claim is the usual path for small business debts. Small claims are designed to be accessible without a lawyer. Filing fees change each 1 July; check the current fee on the tribunal’s or court’s website before you file.

Larger debts need a higher court or division, where the process is more formal.

Statutory demand is a powerful tool if the debtor is a company. It gives them 21 days to pay or face wind-up proceedings. But it only works against registered companies, and the debt must be undisputed.

State-specific small claims limits

Each state sends an unpaid invoice to a different tribunal or court, with different limits:

• New South Wales: Local Court — Small Claims Division up to $20,000; General Division over $20,000 up to $100,000. A business debt does not go to NCAT, which hears consumer claims brought by the consumer.
• Victoria: VCAT — Civil Claims List
• Queensland: QCAT — minor civil disputes up to $25,000
• Western Australia: Magistrates Court — minor case claims up to $10,000; general procedure claims up to $75,000
• South Australia: Magistrates Court — minor civil actions up to $12,000; general claims up to $100,000
• Tasmania: Magistrates Court (Civil Division) — claims up to $50,000
• Australian Capital Territory: ACAT — civil disputes up to $25,000
• Northern Territory: NTCAT — small claims up to $25,000

Check your state’s tribunal or court website for current limits and filing fees.

What if the debtor disputes the invoice?

If the debtor genuinely disputes the invoice — claiming the work was defective, the goods were not delivered, or the amount is incorrect — a final demand may not be appropriate.

A disputed debt should be resolved through negotiation, mediation, or a tribunal or court hearing. Sending a final demand for a genuinely disputed amount can backfire, as the debtor may file a counterclaim or defence.

If the debtor raises a dispute after receiving your final demand, respond in writing, provide evidence that the work was completed or the goods were delivered, and offer to mediate if necessary. If the dispute is not resolved, you will need to file a claim and let the tribunal or court decide.

Interest and costs

Most invoices include payment terms that allow you to charge interest on overdue amounts. The rate is usually set in your terms and conditions (e.g. 10% per annum, or 2% per month).

If your terms do not specify an interest rate, you may still be able to claim interest under penalty interest provisions in some states, or under common law principles if the contract is silent.

You can also claim reasonable debt recovery costs, such as the cost of sending the final demand, registered post fees, and filing fees. These are added to the total amount owed in your final demand and claim.

What happens after you file

Once you file, the claim must be served on the debtor. Depending on the state, the matter may be listed for a directions hearing, conciliation, mediation or pre-trial review, then a final hearing if it does not settle, after which the tribunal or court makes orders.

If the debtor does not respond or attend, you may be able to get a default judgment or order. If the claim is decided in your favour, the tribunal or court makes orders for payment.

If the debtor still does not pay after an order or judgment, you can enforce the judgment by garnishing their bank account, garnishing their wages, seizing and selling their assets (via a sheriff or bailiff), or issuing a bankruptcy notice (if the debt is over $10,000).

Enforcement is a separate process with additional costs, but it is the only way to collect on a judgment if the debtor refuses to pay voluntarily.

Final checklist before sending a final demand

Before you send a final demand, confirm:

• You have the correct legal name and address for the debtor
• The invoice is accurate and matches the work performed or goods delivered
• You have evidence of delivery (emails, signed quotes, delivery dockets, photos)
• Your payment terms allow for the interest or fees you are claiming
• You are prepared to file a claim if the demand is ignored
• You have kept copies of all previous reminders and correspondence

If any of these are missing, fix them before sending the final demand. A poorly drafted or factually incorrect final demand can weaken your case if you end up in a tribunal or court.

How Claim Done helps

Claim Done prepares your final demand in about 5 minutes. You complete a short intake form, tell us about your invoice and any supporting evidence, and our Programmatic Algorithms draft a legally precise final demand.

The letter is sent to the debtor by email.

If the debtor still does not pay, Claim Done can also prepare your tribunal application ($97), which drafts the application or statement of claim for your state’s tribunal or court, with a witness statement outline. You approve it, then file it yourself.

$49 flat fee. No subscription. Done in about 5 minutes. Get your final demand prepared now.

Frequently Asked Questions

Can I send a final demand before 90 days?

Yes. There is no legal requirement to wait 90 days. You can send a final demand as soon as the invoice is overdue, especially if your payment terms are short or the debtor has explicitly refused to pay. The 90-day mark is a common commercial practice, not a legal threshold.

What if the debtor ignores my final demand?

If the debtor does not pay or respond within the deadline, your next step is to file a small claim with your state’s tribunal or court (the forum and limit depend on your state; see the list above) or a claim in a higher court for larger debts. Claim Done’s Tribunal Application ($97) drafts the document that starts your claim.

Can I charge interest on an overdue invoice?

Yes, if your payment terms or contract include an interest clause. Most businesses charge 10% per annum or 2% per month on overdue amounts. If your terms are silent, you may still be able to claim interest under penalty interest legislation in some states or common law principles.

Do I need a lawyer to send a final demand?

No. A final demand is a formal letter, not a court document. Claim Done prepares your final demand in about 5 minutes using your invoice and evidence, and sends it by email.

What is the difference between a letter of demand and a final demand?

A letter of demand is the first formal notice sent after reminders are ignored, usually giving 14 days to pay. A final demand is the last notice before legal action, usually giving 7 days to pay and explicitly warning of tribunal or court proceedings. Both serve the same legal purpose, but a final demand signals immediate escalation.