You have sent the invoice. You have sent a polite reminder at 30 days. You have sent a firmer follow-up at 60 days. Now it has been 90 days, and the company still has not paid.
Sending another reminder email is unlikely to change anything. If the debtor is a registered Australian company and owes you $4,000 or more, a statutory demand under section 459E of the Corporations Act 2001 may be your most effective option.
Why 90 days is the breaking point
Most payment terms are 7, 14, or 30 days. By the time three months have passed:
- The debtor has received multiple reminders
- They know the debt exists
- They have chosen not to pay
- The relationship is already damaged
The question is not whether to escalate — it is how to escalate in a way that actually produces payment.
What a statutory demand does
A statutory demand is a formal notice under the Corporations Act. It gives the debtor company exactly 21 days to either:
- Pay the debt in full, or
- Apply to a court to set the demand aside
If the company does neither, it is presumed to be insolvent. You can then apply to wind up the company — a process that often results in immediate payment, because directors do not want their company placed into liquidation.
When a statutory demand makes sense
A statutory demand only works when all of the following apply:
The debtor is a registered company Statutory demands apply only to companies registered with ASIC — Pty Ltd or Ltd entities. You cannot serve a statutory demand on a sole trader, partnership, or individual.
The debt is $4,000 or more Section 459E sets a minimum threshold of $4,000. If the invoice is less than that, you need a different method.
The debt is liquidated and undisputed The amount must be a specific, ascertained sum — not an estimate or claim for unliquidated damages. If the debtor has raised a genuine dispute about the work, quality, or amount, a statutory demand is not appropriate.
You have already tried to recover the debt Courts expect creditors to make reasonable attempts to recover a debt before issuing a statutory demand. Sending reminders, a letter of demand, or making phone calls satisfies this requirement.
The relationship is already over A statutory demand signals that you are prepared to wind up the company if they do not pay. If you want to preserve the commercial relationship, this is not the right tool.
Why statutory demands work when reminders do not
Reminders rely on goodwill. Statutory demands rely on consequences.
When you send a reminder, the debtor can ignore it. When you serve a statutory demand, the debtor must act within 21 days or face presumed insolvency.
This creates immediate pressure at board level. Directors become personally exposed if the company continues trading while insolvent. Accountants and lawyers get involved. Payment suddenly becomes a priority.
In practice, most statutory demands result in payment before the 21 days expire — often within the first week.
What happens if they do not pay
If the company does not pay or apply to set aside the demand within 21 days, you can file an application to wind up the company in the Federal Court or Supreme Court.
This does not mean the company will be liquidated immediately. The court will set a hearing date, usually several weeks later. At this point, three things typically happen:
- The company pays the debt in full to avoid the hearing
- The company applies to set aside the statutory demand (if they have grounds)
- The company enters into a payment arrangement and you agree to adjourn or withdraw the application
Very few winding-up applications proceed to a final hearing. The process itself creates enough pressure to force resolution.
The cost of issuing a statutory demand
A statutory demand is significantly cheaper than commencing court proceedings for debt recovery.
You need:
- Form 509H — the prescribed statutory demand form
- A supporting affidavit — verifying the debt, sworn before a JP or solicitor
- Service — personal service on the company’s registered office
There is no court filing fee at this stage. You only pay a filing fee if you later apply to wind up the company (currently $1,735 in the Federal Court).
ClaimDone prepares Form 509H and the supporting affidavit template for a flat fee of $197. You arrange service yourself, or instruct a process server (typically $150–$300 depending on location).
Total cost to issue a statutory demand: under $500 in most cases.
Compare this to commencing proceedings in a tribunal or court, where filing fees alone can exceed $1,000, and the process takes months.
Common mistakes to avoid
Issuing a demand for a disputed debt If the debtor has raised a genuine dispute — even a weak one — the court will likely set aside the demand. Do not use a statutory demand to force payment of a contested invoice.
Incorrect service The demand must be personally served at the company’s registered office address (check the ASIC register). Emailing it or posting it is not valid service.
Defects in the form or affidavit Form 509H must be completed correctly. The supporting affidavit must verify the debt and explain how it arose. Errors can result in the demand being set aside.
Using it as a bluff Do not issue a statutory demand unless you are prepared to follow through with a winding-up application if necessary. Courts take a dim view of creditors who issue demands with no intention of enforcing them.
Alternatives if the debt is under $4,000
If the unpaid invoice is less than $4,000, you cannot use a statutory demand. Your options include:
- Letter of demand — a formal demand letter giving a final deadline for payment
- Small claims tribunal — file in your state’s civil tribunal (VCAT, NCAT, QCAT, etc.) for debts typically under $10,000–$25,000
- Debt collection agency — engage a commercial debt collector (they usually take 15–30% of the recovered amount)
- Write it off — if the cost of recovery exceeds the debt, it may not be worth pursuing
For debts over $4,000 owed by a company, a statutory demand is almost always the most cost-effective first step.
How ClaimDone helps
ClaimDone prepares Form 509H and the supporting affidavit template based on the evidence you upload — invoices, payment terms, correspondence, proof of delivery.
You complete a short intake form. Our Proprietary AI Engine reads your documents, verifies the debt meets the statutory requirements, and generates:
- A completed Form 509H citing the correct debt amount and company details
- A supporting affidavit template ready for you to swear before a JP or solicitor
- Instructions on how to arrange personal service
The documents are prepared in under 60 minutes. You download them, have the affidavit sworn, and arrange service.
ClaimDone does not give legal advice. If the debtor applies to set aside the demand, or if you need to file a winding-up application, you should instruct a lawyer. But for the initial statutory demand, ClaimDone gives you the documents you need at a fixed cost of $197.
When to get a lawyer instead
You should instruct a lawyer if:
- The debt is disputed and you need to prove it in court
- The debtor has already applied to set aside a previous demand
- You are ready to file a winding-up application
- The debt exceeds $100,000 and you want specialist advice
- The debtor is threatening defamation or other counterclaims
For straightforward unpaid invoices over $4,000 where the company is ignoring reminders, a statutory demand prepared by ClaimDone is often all you need to get paid.
Ready to issue a statutory demand?
After 90 days of reminders, you need a tool with consequences. For company debts over $4,000, a statutory demand is that tool.
ClaimDone prepares Form 509H and your supporting affidavit in under 60 minutes for a flat fee of $197. Upload your invoice and correspondence, answer a few questions, and download your completed statutory demand ready for service. Get started with a statutory demand.
Frequently Asked Questions
Can I send a statutory demand to a sole trader or individual?
No. Statutory demands under section 459E of the Corporations Act only apply to registered companies (Pty Ltd or Ltd entities). For debts owed by individuals or sole traders, you need to use a letter of demand or commence tribunal proceedings.
What happens if the company disputes the debt after I serve the demand?
If the company applies to set aside the statutory demand within 21 days and raises a genuine dispute, the court will likely set it aside. You cannot use a statutory demand to recover a genuinely disputed debt — it is only for liquidated, undisputed amounts.
How much does it cost to issue a statutory demand in Australia?
There is no court filing fee to issue a statutory demand. You need to prepare Form 509H and a supporting affidavit (ClaimDone does this for $197), then arrange personal service (typically $150–$300). Total cost is usually under $500.
How long does the company have to respond to a statutory demand?
The company has exactly 21 days from the date of service to either pay the debt in full or apply to a court to set aside the demand. If they do neither, they are presumed insolvent and you can apply to wind up the company.
Can I issue a statutory demand if I have already sent a letter of demand?
Yes. Courts expect creditors to make reasonable attempts to recover a debt before issuing a statutory demand. Sending a letter of demand, reminders, or making phone calls satisfies this requirement. A statutory demand is the next step when those attempts fail.
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