Unpaid Invoice 90+ Days: Letter of Demand or Tribunal?

An invoice unpaid for 90 days is no longer a late payment — it is a debt recovery problem. You have given the debtor three months. They have not paid. Now you decide: send a letter of demand, or file directly at the tribunal?

The answer depends on the size of the debt, the debtor’s behaviour, and whether you want to spend $49 now or a filing fee later.

Why 90 days matters

Most Australian businesses operate on 30-day payment terms. By 90 days, the debtor has had three payment cycles to organise funds, multiple opportunities to communicate if there was a problem, and enough time to dispute the invoice if they genuinely disagreed.

If they have done none of these things, you are dealing with one of three scenarios:

1. They are avoiding payment — they have the money but are stalling
2. They cannot pay — cash flow problems, insolvency risk
3. They dispute the invoice — but have not told you

Each scenario requires a different approach.

The letter of demand option

A letter of demand is a formal notice that you intend to take legal action if the debt is not paid. It sets a deadline (typically 7–14 days) and warns of tribunal proceedings.

When a letter of demand works

A letter of demand is most effective when:

• The debt is under $5,000 — tribunal filing fees and time investment may not be worth it yet
• The debtor is still in business — they have assets, reputation, and reason to avoid a tribunal claim
• You have not sent a formal demand yet — many debtors pay once they realise you are serious
• The debtor has been responsive in the past — late, but not completely ignoring you
• You want to preserve the relationship — a letter is less aggressive than a tribunal filing

Cost and timing

Claim Done prepares and sends a letter of demand for $49. The letter is drafted based on the evidence you describe and delivered by email.

The letter is drafted from your answers, and you review it before anything is sent.

If the debtor pays within the deadline, you recover the debt for $49. If they do not, you still have the option to file at tribunal — and the letter becomes evidence that you attempted to resolve the matter before filing.

What happens after you send it

One of four things:

1. They pay in full — problem solved
2. They offer a payment plan — you can accept, negotiate, or refuse
3. They dispute the debt — you now know their position and can decide whether to proceed
4. They ignore it — strong evidence of avoidance, making your tribunal case easier

The tribunal option

Filing at a tribunal or court (VCAT in Victoria, QCAT in Queensland, the Local Court in NSW, the Magistrates Court in WA, SA and Tasmania) means you are asking a government body to make a legally binding order for payment. If you win, the debtor must pay — and if they do not, you can enforce the order through wage garnishment, bank account seizure, or property liens.

When to go straight to tribunal

Skip the letter of demand and file directly if:

• The debt is over $10,000 — the cost of tribunal filing is proportionate, and you need a binding order
• The debtor has ignored multiple invoices and reminders — a letter will not change their behaviour
• The debtor is insolvent or closing down — you need a judgment before they liquidate
• You have already sent a letter of demand — and they ignored it
• The debtor is interstate or offshore — you need an enforceable order, not just a letter

Cost and timing

Filing fees vary by state and debt size. Fees change each 1 July; check the current fee on the tribunal’s or court’s website before you file.

Claim Done prepares tribunal applications for $97. You tell us what evidence you have and complete a 10-minute intake, and the application is drafted from your answers for you to check and lodge.

You file it yourself at the tribunal (online or in person).

What happens after you file

The application is then served on the debtor; at VCAT and QCAT, serving it is your job, not the tribunal’s. The debtor then has time to respond, which depends on the state and the type of claim. If they do not respond, you can apply for a default judgment.

If they do respond, the matter proceeds to a directions hearing, then a final hearing. You present your evidence. The tribunal makes an order.

If you win, the debtor typically has 28 days to pay. If they do not, you can enforce the order through the sheriff, garnishee orders, or bankruptcy proceedings (if the debt is over $10,000).

Decision framework: letter or tribunal?

Send a letter of demand if:

• Debt is under $5,000
• Debtor is still operating and has assets
• You have not sent a formal demand yet
• You want to test their willingness to pay before spending on tribunal fees
• You want to preserve the commercial relationship
• You are prepared to wait 7–14 days for a response

Go straight to tribunal if:

• Debt is over $10,000
• Debtor has ignored a previous letter of demand
• Debtor is insolvent, liquidating, or about to disappear
• You need a binding court order to enforce against assets
• Debtor is interstate and you need an enforceable judgment
• You have already waited 90+ days and do not want to give them another two weeks

The hybrid approach

Many businesses send a letter of demand first, then file at tribunal if the debtor does not respond. This approach:

• Costs $49 + the tribunal or court filing fee (if needed)
• Gives the debtor one last chance to pay voluntarily
• Creates evidence of your attempt to resolve the matter (tribunals view this favourably)
• Delays tribunal filing by 7–14 days

If you are confident the debtor will ignore the letter, skip it and file directly.

Common mistakes to avoid

Waiting too long to act. The longer you wait past 90 days, the harder recovery becomes. Debtors who have not paid in three months are unlikely to pay in six months without legal pressure.

Sending multiple informal reminders instead of a formal demand. Friendly emails do not work on debtors who are avoiding payment. A letter of demand threatening tribunal action does.

Filing at tribunal without evidence. Tribunals require proof: the original invoice, proof of delivery, correspondence, contracts, terms and conditions. Gather everything before you file.

Accepting a payment plan without a written agreement. If the debtor offers to pay in instalments, get it in writing. Use a payment plan agreement that specifies what happens if they miss a payment.

Ignoring insolvency warning signs. If the debtor is struggling to pay multiple creditors, a letter of demand will not help. File at tribunal immediately to get your judgment before they liquidate.

How Claim Done helps

Claim Done prepares both letters of demand and tribunal applications using the same process:

1. Tell us what evidence you have — invoices, contracts, emails, delivery receipts
2. Complete a 5-minute intake — describe what happened and what you are owed
3. Receive your document — for you to read, edit and approve before it is sent or filed
4. Email delivery (letter of demand) or an application you check and lodge yourself (tribunal)

Letter of demand: $49 flat fee, prepared in about 5 minutes and sent by email.

Tribunal application: $97 flat fee, prepared in about 5 minutes, for you to check and file.

Both services are available Australia-wide. No subscription. No hourly billing.

Final recommendation

If the debt is under $5,000 and you have not sent a formal demand yet, start with a letter. It often works. If the debtor ignores it, you can file at tribunal with evidence that you tried to resolve the matter first.

If the debt is over $10,000, or the debtor has already ignored a letter of demand, go straight to tribunal. You have waited 90 days. You do not need to wait another two weeks for a debtor who is clearly avoiding payment.

Either way, act now. Debts do not get easier to recover with time. Get your letter of demand drafted by our Programmatic Algorithms in about 5 minutes, or have your tribunal application drafted for you to check and lodge.

Frequently Asked Questions

Can I send a letter of demand after 90 days, or is it too late?

No, it is not too late. A letter of demand can be sent at any time before the limitation period expires (generally six years from when the debt fell due for contract debts, or three years in the Northern Territory). Even after 90 days, many debtors pay once they receive a formal legal demand.

What if the debtor ignores my letter of demand?

If the debtor does not respond within the deadline (usually 7–14 days), you can file at tribunal. The ignored letter of demand becomes evidence that you attempted to resolve the matter before taking legal action, which tribunals view favourably.

Is a letter of demand legally required before filing at tribunal?

No. Australian tribunals do not require you to send a letter of demand first. However, sending one shows you made a genuine attempt to resolve the dispute, which can strengthen your case and sometimes leads to faster payment without tribunal involvement.

How much does it cost to file at tribunal in Australia?

Filing fees vary by state and debt size. Fees change each 1 July; check the current fee on the tribunal’s or court’s website before you file.

Can I recover the cost of the letter of demand or tribunal filing from the debtor?

In most cases, yes. If you win at tribunal, you can ask the tribunal to order the debtor to pay your filing fees and reasonable costs. The letter of demand fee can be included in your claim as a pre-action cost, though tribunals have discretion on whether to award it.