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.

If the debt is under $10,000 in most states, you will be filing in a small claims tribunal. Tribunals typically expect parties to have tried to resolve the dispute before applying. A final demand satisfies that requirement.

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 tribunal application (debts under $10,000 in most states, up to $25,000 in some)
2. File a statement of claim in the Local or Magistrates Court (debts over the tribunal limit)
3. Serve a statutory demand (if the debtor is a registered company and the debt is over $4,000)

Tribunal is the most common path for small business debts. It is designed to be accessible without a lawyer, the filing fee is typically $50-$200 depending on the state, and hearings are usually scheduled within 8-12 weeks.

Court is necessary for larger debts, but the process is slower and more formal. You may need a lawyer.

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 tribunal limits

Each state has different monetary limits for small claims tribunals:

• NSW: NCAT — up to $10,000 (general division), $30,000 (consumer claims)
• VIC: VCAT — up to $10,000
• QLD: QCAT — up to $25,000
• WA: Magistrates Court (small claims) — up to $10,000
• SA: SACAT — up to $12,000
• TAS: Magistrates Court (small claims) — up to $5,000
• ACT: ACAT — up to $10,000 (general), $25,000 (consumer)
• NT: Local Court (small claims) — up to $25,000

Check your state’s tribunal 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 tribunal 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 tribunal application and let the tribunal 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 tribunal filing fees. These are added to the total amount owed in your final demand and tribunal application.

What happens after you file

Once you file a tribunal application, the tribunal will serve the application on the debtor, schedule a directions hearing or mediation (in some states), schedule a final hearing if mediation fails, and issue orders (usually requiring the debtor to pay the debt, plus interest and costs).

If the debtor does not attend the hearing, you can apply for a default judgment. If they do attend but lose, the tribunal will make orders for payment.

If the debtor still does not pay after a tribunal order, 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.

When to get a lawyer

You do not need a lawyer to send a final demand or file a tribunal application. Tribunals are designed for self-represented parties.

But you should consider a lawyer if the debt is over $25,000, the debtor is disputing the invoice with a counterclaim, the matter involves complex contract terms or technical issues, you are dealing with a large company with in-house legal teams, or the debtor has filed for bankruptcy or liquidation.

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 tribunal application 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 tribunal.

How ClaimDone helps

ClaimDone prepares your final demand in 60 minutes. You complete a short intake form, upload your invoice and any supporting evidence, and our Proprietary AI Engine drafts a legally precise final demand.

The letter is automatically sent to the debtor via registered post and email, with tracking confirmation sent to you.

If the debtor still does not pay, ClaimDone can also prepare your tribunal application, including the statement of claim, witness statement, and evidence bundle — everything you need to file and attend the hearing.

$79 flat fee. No subscription. Done in 60 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 tribunal application (for debts under $10,000-$25,000 depending on your state) or a statement of claim in court (for larger debts). ClaimDone can prepare your tribunal application including all required documents.

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. ClaimDone prepares your final demand in 60 minutes using your invoice and evidence, and sends it automatically. You only need a lawyer if the matter is complex, high-value, or disputed.

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.