Client Won't Pay Your Invoice? What to Do in Australia

You did the work, sent the invoice, and the due date has come and gone. The first reminder got a "sorry, will sort it this week". The second got nothing. Now you're wondering how hard you can push without burning the relationship, and what you can actually do if they simply never pay.

Quite a lot, as it turns out. Here are the steps Australian freelancers and sole traders can take to recover an unpaid invoice, in the order that usually works, and what each one involves.

This article is general information, not legal advice. For large amounts or a genuinely disputed job, consider speaking with a lawyer.

First, Check Whether It Is Late or Disputed

These are two different problems. A client who is slow, disorganised or short of cash owes you money and knows it. A client who is unhappy with the work believes they don't owe you the full amount. Everything below works well for the first kind. For the second, you need to deal with the complaint before a demand for payment will get anywhere, because a tribunal will want to hear both sides of it.

So before you escalate, ask one direct question in writing: "Is there any problem with the work or the invoice that is holding up payment?" If the answer is no, or silence, you have a plain debt and a written record that nothing was raised.

Gather Your Evidence

Whatever happens next, you will rely on the same handful of documents. Pull them together now:

• The agreement: a signed contract if you have one, otherwise the quote they accepted or the emails and messages where the job and price were agreed
• The invoice, with its date, amount, due date and your payment details
• Proof you delivered: the files sent, the handover email, the site going live, the client using the work
• Your reminders and their replies, especially any message where they acknowledge the invoice or promise to pay

Step 1: Send a Firm Reminder in Writing

Skip the apologetic tone. A good reminder states the invoice number, the amount, the original due date, how many days overdue it is, and a new date you expect payment by. Attach the invoice again so there is no "I can't find it" delay. Email is fine, and it gives you a dated record.

Step 2: Call, Then Confirm What Was Said

A phone call often shakes loose what three emails could not: the invoice is sitting with an accounts person, or the client has a cash problem and is embarrassed. If they can't pay it all, a payment plan is usually better than nothing. Whatever you agree, follow up straight away with an email that sets it out ("as discussed today, you will pay $1,000 on the 15th and the balance on the 30th"). That email turns a phone promise into evidence.

Step 3: Send a Formal Letter of Demand

If the new date passes, stop reminding and send a formal letter of demand. It sets out the work done, the amount owed, a firm deadline (7 to 14 days is common) and what you will do if it is ignored, which is normally lodging a claim with your state's tribunal or court.

It is not a court document, but it changes the tone. It tells the client you have stopped waiting, and it is the proof that you tried to settle things first, which tribunals expect to see before they hear a claim.

Can You Add Interest or a Late Fee?

Only if it was agreed before the work started. If your contract or accepted terms say that overdue invoices attract interest or a late fee, you can claim it, provided the amount is reasonable and reflects your real cost of being paid late rather than a punishment. If your terms said nothing, you generally can't add a charge to the invoice afterwards. You can still ask the tribunal or court to award interest as part of your claim.

Step 4: Use the Free Help Before You File

Two free services are worth knowing about. The Australian Small Business and Family Enterprise Ombudsman helps small businesses, including sole traders, with payment disputes and can point you to low-cost mediation. Several states also have their own small business commissioner offering a similar service. Contact from one of these bodies resolves many unpaid invoices without a hearing.

Step 5: Lodge a Claim

If the deadline in your letter passes, you can lodge a claim with your state's small claims body: NCAT or the Local Court (NSW), VCAT (VIC), QCAT (QLD), the Magistrates Court (WA, SA, TAS), ACAT (ACT) or NTCAT (NT). They are designed for people without lawyers and the filing fees are modest. Which body hears a business-to-business debt, and up to what amount, differs by state, so check our state-by-state small claims guide before you file.

If you want help laying out the claim, the evidence and the timeline in order, that is what a small claims plan is for.

If the Client Is a Company

When the debtor is a company (a Pty Ltd) and the undisputed debt is at least $4,000, there is a heavier tool: a creditor's statutory demand under the Corporations Act. The company has 21 days to pay or apply to set it aside, and if it does neither it is presumed insolvent. It is powerful, but it must not be used where the debt is genuinely disputed, and getting it wrong can leave you paying the other side's costs. Get legal advice before using one.

How Long Do You Have?

In most of Australia you have six years from the date the invoice fell due to start a claim. In the Northern Territory it is three years. A written acknowledgement of the debt or a part payment can restart that period in most places. In practice, the sooner you act the better: the evidence is fresh, and a client in trouble tends to pay the creditors who chase first.

For the Next Job: Make Late Payment Hard

Most unpaid invoices trace back to terms that were never written down. Before your next project starts, a short signed freelancer agreement should cover:

• A deposit before work begins, so you are never owed the full amount
• Payment terms in days (7 or 14 is common for freelance work) and staged payments on longer jobs
• Interest or a late fee on overdue invoices, stated up front
• Ownership of the work passing to the client only once it is paid for in full
• A clear scope, so "that's not what I asked for" can't be used to hold back payment

See our guide to writing a freelance contract in Australia for the full list.

Sources: Australian Small Business and Family Enterprise Ombudsman, business.gov.au, Corporations Act 2001 (Cth) s 459E.

Frequently Asked Questions

Can I charge interest on an overdue invoice in Australia?

Yes, if interest or a late fee was part of the terms the client agreed to before the work began, and the amount is reasonable. If nothing was agreed, you generally cannot add it to the invoice yourself, though you can ask a tribunal or court to award interest on the debt.

I have no written contract. Can I still recover the invoice?

Usually, yes. An accepted quote, emails or messages agreeing the job and price, and proof that you delivered the work can together show there was an agreement. It is harder to prove than a signed contract, but it is very often enough.

Can I stop work or take the work back until I am paid?

You can generally pause further work on an overdue account, and it is sensible to say so in writing. Taking back or disabling work already delivered is riskier and depends on what your agreement says about ownership, so get advice before doing it. A clause that ownership passes only on full payment puts you in a much stronger position.

Do I need a lawyer to chase an unpaid invoice?

Not for a straightforward debt. Reminders, a letter of demand and a small claims application are all designed to be done yourself. Legal advice is worth it for large amounts, a disputed job, or before issuing a statutory demand against a company.

Should I use a debt collector?

It is an option once your own letter of demand has been ignored. Collectors typically charge a percentage of what they recover, so compare that with the filing fee for a small claim you run yourself.

How long should I wait before escalating?

There is no fixed rule, but a common pattern is a reminder a few days after the due date, a call within two weeks, and a letter of demand once the invoice is about 30 days overdue. Waiting longer rarely improves your chances.