Unpaid Invoice Over $10,000: Letter of Demand or Statutory Demand?

When you are owed over $10,000 on an unpaid invoice in Australia, you need to choose between two debt recovery tools: a letter of demand or a statutory demand. The right choice depends on one critical factor: is your debtor a registered company (Pty Ltd or Ltd) or a sole trader/individual?

The fundamental difference

A letter of demand works against anyone — individuals, sole traders, partnerships, trusts, and companies. It is a formal written demand for payment that sets a deadline (typically 7-14 days) and warns of legal action if the debt remains unpaid.

A statutory demand is available only against registered companies. It gives the company 21 days to pay the debt or apply to set aside the demand. If they do neither, you can commence wind-up proceedings to liquidate the company.

When to use a letter of demand

Use a letter of demand if:

• The debtor is a sole trader, individual, or partnership — statutory demands do not apply to natural persons
• You want to preserve the commercial relationship — a letter is less aggressive than threatening insolvency
• The debt may be disputed — statutory demands require undisputed debts; a letter allows you to set out your position before escalating
• You need evidence for tribunal or court — most tribunals require proof that you demanded payment before filing
• The debtor is a company but the debt is below $4,000 — statutory demands have a minimum threshold

A letter of demand gives the debtor a clear final opportunity to pay. If they ignore it, you can file in the relevant tribunal (NCAT, VCAT, QCAT) or court depending on the amount and jurisdiction.

When to escalate straight to a statutory demand

Use a statutory demand if:

• The debtor is a registered Pty Ltd or Ltd company — check the ASIC register to confirm
• The debt is at least $4,000 — this is the minimum threshold for statutory demands (your $10,000+ invoice qualifies)
• The debt is liquidated and undisputed — the amount must be a specific sum, and the company has not raised a genuine dispute
• You want maximum leverage fast — a statutory demand gives the company 21 days to pay or face insolvency proceedings
• The company has been ignoring your invoices — a statutory demand cannot be ignored without serious consequences

A statutory demand shifts the burden entirely onto the company: pay, apply to set aside the demand in court, or risk being presumed insolvent. Most companies pay rather than face liquidation.

The $4,000 threshold and your invoice

Statutory demands require a minimum debt of $4,000. If your unpaid invoice is over $10,000, you are well above this threshold.

However, the debt must be:

• Liquidated — a specific, ascertained amount (not estimated damages)
• Due and payable — the payment terms have passed
• Undisputed — the company has not raised a genuine dispute about the work, quality, or amount

If the company has raised a genuine dispute (claiming defective work, incorrect invoice, or a set-off), a statutory demand may be set aside by the court. In that case, start with a letter of demand to clarify the position.

How to check if your debtor is a company

Before deciding, confirm the debtor’s legal structure:

1. Check the ASIC register — search at asic.gov.au/online-services/search-asics-registers
2. Look for “Pty Ltd” or “Ltd” in the business name — these suffixes indicate a registered company
3. Check the ABN Lookup — abn.business.gov.au shows the entity type

If the debtor is a sole trader or individual trading under a business name, they are not a company and a statutory demand will not work. Use a letter of demand instead.

Combining both approaches

Many creditors send a letter of demand first, even against a company, to give one final opportunity to pay before escalating. This approach:

• Preserves goodwill — the debtor may pay without the nuclear threat
• Creates a paper trail — you can show the company was given every opportunity
• Flushes out disputes — if the company raises a genuine dispute, you know a statutory demand may be set aside

If the company ignores the letter of demand, you can escalate to a statutory demand immediately. The deadline in the letter does not prevent you from issuing a statutory demand later.

What happens after you serve a statutory demand

Once you serve a statutory demand on a company (via registered post to the registered office), the company has 21 days to:

1. Pay the debt in full — most companies pay rather than risk wind-up
2. Apply to set aside the demand — the company must file an application in the Supreme Court or Federal Court within 21 days, supported by an affidavit showing a genuine dispute or other defect
3. Do nothing — after 21 days, the company is presumed insolvent and you can file a winding-up application

If the company applies to set aside the demand, you must attend court to defend it. If the court finds there is a genuine dispute, the demand will be set aside and you must pursue the debt through normal court proceedings.

How ClaimDone helps

ClaimDone prepares both letters of demand and statutory demands for Australian creditors:

• Letter of demand — $79 flat fee. Our Proprietary AI Engine reads your invoice, evidence, and timeline, drafts a professionally formatted letter, and delivers it automatically via registered post and email. Done in 60 minutes.

• Statutory demand — $197 flat fee. We prepare the statutory demand form and supporting affidavit template, ready for you to swear before a JP or solicitor and serve on the company. All states. Done in 60 minutes.

Both services are fixed-fee, no subscription. Upload your invoice, contracts, and correspondence, and our system generates the document tailored to your case.

When to get a lawyer

For unpaid invoices over $10,000, consider engaging a lawyer if:

• The company applies to set aside your statutory demand
• The debt involves multiple invoices, set-offs, or cross-claims
• You are considering winding-up proceedings (this requires legal representation)
• The debtor is disputing the work, quality, or contract terms

ClaimDone does not give legal advice. We generate legal-style documents. For strategic advice on debt recovery or insolvency, consult a qualified Australian lawyer.

Final decision: letter or statutory demand?

Use a letter of demand if:

• The debtor is a sole trader, individual, or partnership
• You want to preserve the relationship
• The debt may be disputed
• You need evidence for tribunal or court

Use a statutory demand if:

• The debtor is a registered Pty Ltd or Ltd
• The debt is over $4,000, liquidated, and undisputed
• You want maximum leverage and fast payment
• The company has been ignoring your invoices

For unpaid invoices over $10,000 owed by a company, a statutory demand is typically the fastest path to payment. For all other debtors, start with a letter of demand and escalate to tribunal or court if ignored.

Get started with ClaimDone

Owed over $10,000 on an unpaid invoice? ClaimDone prepares your statutory demand or letter of demand in 60 minutes for a flat fee with no subscription. Upload your evidence and our Proprietary AI Engine generates the document citing the applicable Australian law. Start your statutory demand now.

Frequently Asked Questions

Can I issue a statutory demand for an unpaid invoice under $10,000?

Yes, as long as the debt is at least $4,000 (the minimum threshold for statutory demands) and the debtor is a registered company. The $10,000 figure in this article is an example, not a legal threshold. Any debt over $4,000 qualifies for a statutory demand against a company.

What if the company claims the work was defective after I serve a statutory demand?

If the company raises a genuine dispute about the quality, scope, or amount of the work, they can apply to set aside the statutory demand within 21 days. The court will examine whether the dispute is genuine. If it is, the demand will be set aside and you must pursue the debt through normal court proceedings. This is why it is critical to ensure the debt is undisputed before issuing a statutory demand.

Can I send a letter of demand to a company and then escalate to a statutory demand later?

Yes. Many creditors send a letter of demand first to give the company a final opportunity to pay before escalating to a statutory demand. If the company ignores the letter, you can issue a statutory demand immediately. The letter of demand creates a useful paper trail showing the company was given every chance to resolve the matter.

How do I serve a statutory demand on a company?

A statutory demand must be served on the company’s registered office address (check the ASIC register) via registered post or personal service. You must also file a supporting affidavit sworn before a JP or solicitor verifying the debt. ClaimDone prepares both the statutory demand form and the affidavit template, but you must arrange service and swearing separately.

What happens if the company ignores my letter of demand?

If the debtor is a company and ignores your letter of demand, you can escalate to a statutory demand (if the debt is over $4,000 and undisputed) or file a claim in the relevant tribunal or court. If the debtor is a sole trader or individual, you can file in the tribunal (for debts under the tribunal limit, typically $10,000-$25,000 depending on state) or the relevant court for higher amounts.