Chasing late payments without burning the relationship

Most late payments are a slip, not a scam. A calm, steady routine gets most of them paid. For the rest, know your next steps before you need them.

Set it up before the invoice goes out

Put clear payment terms in your contract and on every invoice: how to pay, when, and what happens if it's late.
Know who you're dealing with. Get the right business name and ABN before you sign.
Find out who approves your invoices on the client's side, and what they need to see.
Send invoices and claims on time. A late invoice is a late payment.

A friendly-to-firm routine

This is a routine many businesses use. Adjust it to suit your clients.

Day 1 overdue: a friendly reminder. “Just checking this came through.” Ask if anything is holding it up.
Day 7: a firmer reminder with the invoice attached and a pay-by date. Pick up the phone as well.
Day 14: a final reminder that says what you'll do next, such as a letter of demand. Only say it if you'll do it.
Then: a statement of everything they owe, followed by a letter of demand.

Stick to the facts and stay polite. You have legal obligations when you contact another business about a debt, so never harass or threaten. A missed payment is often just an oversight, and a new payment date or a payment plan may solve it.

Footing marks an invoice Overdue the day after it's due and reminds your office on days 1, 7 and 14. It doesn't email your client on its own: you choose when to Remind or Chase. Claims, RFIs and purchase orders wait in Awaiting response with their age, with Chase again one tap away. See chase overdue invoices.

Send a statement

A statement lists every open invoice, what's been paid and what's overdue. It finds invoices that went missing in someone's inbox, and it makes the total hard to ignore.

Letter of demand

If reminders don't work, a letter of demand puts it formally: how much they owe, what for, the date to pay by, and what you'll do if they don't.

Send it to the person who owns the business. That may not be who you dealt with.
Make sure every detail is accurate, and keep it polite.
Only include interest if your contract allows it.
Attach the contract, invoice, reminders and any relevant emails.
Sign and date it, keep a copy, and send it by registered post with proof of delivery.

business.gov.au has a free letter of demand template you can adapt.

Stopping work: only if you have the right

Downing tools because you haven't been paid can put you in breach of your contract, unless your contract or the law gives you that right.

Security of Payment laws let you suspend work in some situations, like when a payment claim isn't paid by the due date. You must give written notice first. In NSW the notice period is 2 business days, and in Victoria it's 3.

When reminders don't work

ASBFEO. The Australian Small Business and Family Enterprise Ombudsman has an online Dispute Support tool to find low-cost dispute help, plus five steps to resolve a dispute.
Mediation. A mediator helps you and your client reach an agreement.
Debt collectors. If you plan to use one, tell the client first. That alone sometimes gets them to pay.
Small claims. Each state has a cheaper, less formal path for smaller debts. The NSW Local Court's Small Claims Division hears claims up to $20,000. In Queensland, QCAT hears minor debt disputes up to $25,000. In other states, check your local court or civil tribunal. Limits and fees vary.

If the debt is under a home building contract, check with your state's building regulator first. There may be a set dispute process.

Keep good records

If it goes further, the side with the better records usually does better. Keep the contract, variations, invoices, reminders, emails, texts and notes of phone calls, all dated. If you had a verbal agreement, emails or texts may be your only proof of what you agreed.

Sources

Checked September 2026. Rules change, and they differ between states. This is general information, not legal or tax advice.

Chase overdue invoicesFind unpaid invoices, email a client when they’re late, and record payments as they come in.4 min Security of Payment: how progress claims get you paidThe basics of Security of Payment laws: payment claims, payment schedules, deadlines and adjudication, and how each state differs.5 min Tax invoices done rightWhat the ATO says a tax invoice must show, plus payment terms, progress invoices and retention, so you get paid without the back-and-forth.4 min

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