Unpaid Invoice Over 90 Days: Statutory Demand or Tribunal?

You have done the work. You have invoiced. You have followed up. Now it is 90 days past due, and the other party is still not paying.

Many Australian small business owners reach this point and ask: should I issue a statutory demand or go straight to tribunal? The answer depends on who owes you the money, how much they owe, and what outcome you want.

Why 90 days matters

Ninety days overdue is not a legal trigger — it is a commercial one. By this point, the debt is clearly aged, the debtor has had multiple opportunities to pay or dispute, and you have likely exhausted goodwill remedies.

This is when businesses typically escalate to formal action. The two most common paths are:

• Statutory demand — a Corporations Act notice giving a company 21 days to pay or face wind-up proceedings
• Tribunal application — filing a claim in your state or territory’s civil tribunal (VCAT, NCAT, QCAT, etc.)

One is a nuclear threat aimed at companies. The other is a formal adjudication process that works against any debtor.

What is a statutory demand?

A statutory demand is issued under the Corporations Act. It is a formal notice served on a registered company (Pty Ltd or Ltd) demanding payment of a debt of $4,000 or more within 21 days.

If the company does not pay or apply to set aside the demand within that period, it is presumed insolvent. You can then apply to wind up the company — a serious consequence that most directors will do anything to avoid.

Requirements for a valid statutory demand

• The debtor must be a registered company (not a sole trader, partnership, or individual)
• The debt must be at least $4,000
• The debt must be liquidated (a specific, ascertainable amount)
• The debt must be undisputed (no genuine dispute on reasonable grounds)
• You must use the prescribed form and serve it correctly
• You must swear a supporting affidavit verifying the debt

Strategic advantages

Psychological pressure. The threat of insolvency proceedings terrifies company directors. Most will pay immediately rather than risk their company being wound up.

Speed. If the company pays within 21 days, you recover the debt without going to court. No tribunal hearing, no waiting months for a judgment.

Low upfront cost. Preparing and serving a statutory demand costs significantly less than filing and prosecuting a tribunal claim.

No need to prove your case twice. If the company does not dispute within 21 days, the presumption of insolvency arises automatically. You do not need to prove the underlying debt in detail unless they apply to set it aside.

Risks and limitations

Company-only tool. You cannot use a statutory demand against sole traders, partnerships, trusts, or individuals. If your debtor is trading under an ABN but is not a registered company, this path is closed.

Genuine dispute defence. If the company can show a genuine dispute about the debt on reasonable grounds, the demand can be set aside. Courts take this seriously — even a weak-looking dispute may succeed if there is any factual question mark.

Costs if challenged. If the company applies to set aside the demand and succeeds, you may be ordered to pay their legal costs. This can exceed the original debt.

Insolvency does not equal payment. Even if you wind up the company, you still need to prove your debt in the liquidation. If the company has no assets, you recover nothing.

Strict compliance required. Any defect in the form, service, or affidavit can invalidate the demand. Courts do not forgive procedural errors.

What is a tribunal application?

A tribunal application is a formal claim filed in your state or territory’s civil and administrative tribunal. These tribunals handle small claims and general disputes up to a monetary limit (typically $10,000 to $25,000 depending on jurisdiction).

You file an application, serve it on the debtor, attend a hearing, and the tribunal makes a binding order. If you win, you get a judgment that can be enforced through the courts.

Requirements for a tribunal application

• The debt must fall within the tribunal’s monetary jurisdiction (varies by state)
• You must file the correct application form and pay the filing fee
• You must serve the application on the debtor
• You must attend the hearing and prove your case
• The debtor can file a defence and counterclaim

Strategic advantages

Works against anyone. Sole traders, partnerships, individuals, companies — tribunals have jurisdiction over all debtor types.

Formal adjudication. You get a hearing, the tribunal weighs the evidence, and you receive a binding order. This is useful if the debtor is disputing the debt or the quality of your work.

Enforceable judgment. Once you have a tribunal order, you can enforce it through garnishee orders, instalment orders, or enforcement warrants. The judgment is a formal court record.

Lower threshold for disputes. Unlike a statutory demand (where any genuine dispute can derail the process), tribunals are designed to resolve disputed claims. Even if the debtor raises defences, you still get your day in court.

Risks and limitations

Time. Tribunal claims typically take 3-6 months from filing to judgment. If the debtor is stalling, it can take longer.

Upfront costs. Filing fees range from $70 to $500+ depending on the claim value and jurisdiction. You also need to prepare your case, gather evidence, and potentially take time off work to attend the hearing.

You must prove your case. Unlike a statutory demand (where the onus shifts to the debtor to dispute), in a tribunal you bear the burden of proving the debt. You need invoices, contracts, correspondence, proof of delivery, and any other supporting evidence.

Judgment does not equal payment. Winning a tribunal order does not mean the debtor will pay. You may still need to enforce the judgment, which adds further time and cost.

Monetary limits. If your debt exceeds the tribunal’s jurisdiction, you must file in a higher court, which is more expensive and procedurally complex.

Comparing the two paths

| Factor | Statutory Demand | Tribunal Application | |——–|——————|———————| | Debtor type | Companies only | Any debtor | | Minimum debt | $4,000 | No minimum (but filing fees make small claims uneconomical) | | Speed | 21 days to pay or dispute | 3-6 months to judgment | | Upfront cost | $197 (ClaimDone) + service costs | $70-$500+ filing fee + preparation time | | Proof required | Affidavit verifying debt | Full evidentiary case at hearing | | Dispute handling | Any genuine dispute can defeat it | Tribunal resolves disputed claims | | Outcome | Presumption of insolvency | Enforceable judgment | | Risk if you lose | Potential costs order | Potential costs order (less common) |

When to use a statutory demand

Use a statutory demand if:

• The debtor is a registered company (check ASIC register)
• The debt is $4,000 or more
• The debt is clearly owed and undisputed (e.g., unpaid invoices for delivered goods or completed work)
• You want to apply maximum pressure for fast payment
• You are prepared to follow through with wind-up proceedings if necessary

Do not use a statutory demand if:

• The debtor is a sole trader, partnership, or individual
• The debt is genuinely disputed (e.g., the debtor claims defective work or non-delivery)
• The debt is less than $4,000
• You cannot afford the risk of a costs order if the demand is set aside

When to file a tribunal application

File a tribunal application if:

• The debtor is not a company (sole trader, individual, partnership)
• The debt is disputed and you need a tribunal to adjudicate
• You want a formal judgment you can enforce
• The debt falls within the tribunal’s monetary jurisdiction
• You have the time and evidence to prosecute the claim properly

Do not file a tribunal application if:

• You need payment urgently (tribunals are slow)
• The debt exceeds the tribunal’s jurisdiction (you will need to file in a higher court)
• You cannot afford the time or cost of preparing and attending a hearing

Can you do both?

Not simultaneously. You cannot issue a statutory demand and file a tribunal application for the same debt at the same time. That would be an abuse of process.

However, you can issue a statutory demand first, and if the company successfully sets it aside, then file a tribunal application to prove the debt. Alternatively, you can file a tribunal application, obtain a judgment, and then use that judgment as the basis for a statutory demand if the company still does not pay.

The strategic sequence depends on your risk tolerance and how confident you are in the strength of your claim.

How ClaimDone helps with aged debt recovery

ClaimDone prepares both statutory demands and tribunal applications for Australian businesses.

For statutory demands: ClaimDone prepares the prescribed form and the supporting affidavit template for $197. You complete the intake form, upload your invoices and evidence, and our Proprietary AI Engine drafts the statutory demand citing the Corporations Act. You then arrange service (we can refer process servers if needed) and swear the affidavit before a JP or solicitor.

For tribunal applications: ClaimDone prepares your tribunal application, statement of claim, and supporting evidence bundle for $197. Our AI reads your evidence, identifies the applicable law, and drafts the application in the format required by your state or territory tribunal. You file it yourself and attend the hearing.

Both services are flat-fee, no subscription, and completed within 60 minutes of submitting your evidence.

Final considerations

An unpaid invoice over 90 days is a serious problem. At this stage, polite follow-ups are not working. You need formal action.

The choice between a statutory demand and a tribunal application depends on who owes you the money, how much they owe, whether the debt is disputed, and how quickly you need resolution.

If the debtor is a company, the debt is clear, and you want fast payment under maximum pressure, a statutory demand is the right tool. If the debtor is not a company, the debt is disputed, or you need a formal judgment, file a tribunal application.

Both paths have costs and risks. Both require proper preparation. And both are significantly more effective than continuing to send reminder emails.

If you are owed money and the debtor will not pay, ClaimDone can prepare your statutory demand in 60 minutes or draft your tribunal application for a flat fee of $197. Upload your invoices, tell us what happened, and our AI drafts the legal document citing the applicable Australian law. No subscription, Australia-wide.

Frequently Asked Questions

Can I issue a statutory demand against a sole trader?

No. Statutory demands under the Corporations Act can only be issued against registered companies (Pty Ltd or Ltd). If your debtor is a sole trader, you must file a tribunal application or pursue other debt recovery methods.

What happens if the company disputes my statutory demand?

The company has 21 days to apply to the court to set aside the demand. If they can show a genuine dispute about the debt on reasonable grounds, the court may set aside the demand and you may be ordered to pay their legal costs. This is why statutory demands should only be used for clearly undisputed debts.

How long does a tribunal application take in Australia?

From filing to hearing to judgment, expect 3-6 months minimum. The exact timeframe depends on your state or territory tribunal’s backlog and whether the debtor files a defence. Tribunals are slower than statutory demands but provide a formal adjudication process for disputed claims.

Can I recover my legal costs if I win at tribunal?

Tribunals generally have discretion to award costs, but they are more reluctant than courts to do so. In many cases, each party bears their own costs regardless of outcome. Check your tribunal’s specific costs rules — some have fixed costs schedules for successful claims.

What if the debt is $3,500 — can I still use a statutory demand?

No. The minimum debt for a statutory demand is $4,000 under the Corporations Act. If your debt is below this threshold, you must file a tribunal application or pursue other recovery methods such as a letter of demand followed by tribunal proceedings.