Late payment and unpaid invoices are a persistent problem for Australian small businesses. ASBFEO data shows that small businesses are owed an average of $42,000 in overdue invoices at any given time. Knowing your recovery options — and acting quickly — is essential.
Start with a formal letter of demand. This is a written notice giving the debtor a final deadline (usually 7-14 days) to pay the outstanding amount, with a clear statement that you will take further action if payment is not received. A well-drafted letter of demand resolves the majority of disputes — many debtors simply need a formal nudge. The letter should reference the original contract or terms of trade, the invoice number and amount, any interest or late fees specified in your terms, and the next step you will take.
For debts under the small claims threshold (varies by state — $25,000 in NSW/WA, $15,000 in VIC, $25,000 in QLD), you can file a claim in the relevant tribunal (NCAT, VCAT, QCAT, or the Magistrates Court). These tribunals are designed for self-representation — you don't need a lawyer, filing fees are low ($50-$200), and hearings are relatively informal. Most matters resolve within 4-8 weeks.
For larger debts owed by companies, you can issue a statutory demand under section 459E of the Corporations Act. If the company fails to pay or apply to set aside the demand within 21 days, it is presumed to be insolvent, and you can apply to wind up the company. This is a powerful tool — most solvent companies pay immediately when served with a statutory demand.
For all debt recovery: document everything from the start. Keep copies of contracts, quotes, invoices, emails, and any communication about the debt. Undocumented debts are significantly harder to recover.