How to Chase Unpaid Invoices in Australia [2026 Guide]

About 80% of unpaid invoices in Australia are collectible by email alone, according to Chaser’s 2026 Accounts Receivable Report, without ever needing a phone call, a formal demand letter, or a tribunal claim. The invoices that do need real escalation follow a specific ladder: a firmer reminder, a written letter of demand, a statutory demand or state tribunal claim once the amount and the debtor’s structure justify it, and, as a last resort, a debt collector or lawyer. Here is exactly how that ladder works in Australia in 2026.

How many unpaid invoices actually need more than a reminder?

Not many. Around 80% of unpaid invoices are collectible by email alone, per Chaser’s 2026 Accounts Receivable Report, before a business ever needs to write a formal demand letter, issue a statutory demand, or file a tribunal claim. That figure holds up against Australia’s own late payment data: Australian invoices settled an average of 6.9 days past their due date in the March quarter of 2026, according to Xero Small Business Insights, which is a delay a well-timed reminder is built to close, not a debt that has gone bad. The practical lesson is to treat email as the default channel for the first one or two follow-ups on every overdue invoice, reserving a phone call or a written escalation for the invoices that survive that stage unpaid.

Figure 1: Share of unpaid invoices collectible by email alone, no legal escalation needed. Source: Chaser, 2026 Accounts Receivable Report.

Consistency matters more than tone at this stage. A structured, escalating reminder cadence, one that gets firmer over a set number of days rather than repeating the same message, collects 78% of overdue invoices by day 15, compared with just 52% for businesses running no defined follow-up sequence at all, per the same Chaser report. That 26-point gap is almost entirely a scheduling problem: the invoices that go unpaid longest are disproportionately the ones nobody circled back to on a fixed day, a gap BillyPaid’s payment reminder effectiveness data breaks down in more detail. A payment reminder sequence that runs automatically on every invoice removes that gap by design, and BillyPaid’s own AU reminder cadence data breaks down exactly how that timing plays out against Australia’s own slow-paying large businesses.

What should a formal letter of demand include?

A specific amount, a specific deadline, and a clear next step. A letter of demand is the first genuinely formal step in the ladder, sitting between a friendly reminder and any legal filing, and it works: The Kaplan Group, a US commercial collection agency, resolves 97% of its claims without ever going to litigation, starting every case with a written demand letter, a pattern BillyPaid’s full demand letter guide breaks down in more detail. A usable Australian letter of demand states the invoice number and amount owed, the original due date, a firm new deadline (commonly 7 to 14 days), and the consequence of continued non-payment, whether that is interest, a debt collector, or a statutory demand. It should be sent in writing, by email or post, and kept on file, since it becomes part of the evidence if the matter escalates further.

Figure 2: Share of overdue invoices collected by day 15, with and without a structured reminder cadence. Source: Chaser, 2026 Accounts Receivable Report.

A letter of demand also sets up whichever step comes next. If the debtor is a company and the amount qualifies, it is the natural precursor to a statutory demand under the Corporations Act. If the debtor disputes the amount, is an individual or sole trader, or the debt sits under a state’s small claims threshold, it is the precursor to a tribunal claim instead. Either way, a business that skips straight to a legal filing without first sending a clear written demand usually ends up doing the same work later anyway, since courts and tribunals commonly expect to see evidence that a debtor was given a genuine chance to pay first.

When can you issue a statutory demand under the Corporations Act?

Once a company owes at least $4,000. A statutory demand under section 459E of the Corporations Act 2001 is a formal, prescribed-form document, backed by a supporting affidavit, that demands payment of a debt, or the total of two or more debts, of at least $4,000, a threshold set by Corporations Regulations 2021 reg 5.4.01AAA. It only applies to debts owed by a company, not an individual, sole trader, or partnership, and the debt must be due, payable, and not the subject of a genuine dispute.

Figure 3: The minimum debt required before a creditor can issue a statutory demand. Source: Corporations Act 2001 (Cth) s459E; Corporations Regulations 2021 (Cth) reg 5.4.01AAA.

Once served, the company has exactly 21 days to act: pay the debt in full, reach a payment agreement with the creditor, or apply to the court under section 459G to have the demand set aside. That 21-day window is absolute, and courts have consistently refused to extend it even by a single day. If the company does neither, it is presumed insolvent under section 459C(2), a presumption that shifts the burden of proof onto the company in any later dispute. The creditor can then apply under section 459P to have the company wound up, without needing to separately prove insolvency, as long as that application is filed within three months of the 21-day compliance period ending, according to the Federal Court of Australia’s own guidance on the process. A statutory demand is a serious step, not a routine collections tool, and it is usually worth legal advice before issuing one, since an invalid or disputed demand can be set aside and leave the creditor covering the debtor’s costs.

Where does the Security of Payment Act fit in?

For construction and trade work specifically, it is often faster than either a statutory demand or a small claims filing. Every Australian state and territory has its own security of payment legislation: NSW, Victoria, Queensland, South Australia, and Tasmania each have a Building and Construction Industry Security of Payment Act, the ACT has its own version of the same name, and Western Australia and the Northern Territory instead run a Construction Contracts Act model. All of them give a contractor or supplier a statutory right to claim a progress payment and, if it goes unpaid or is disputed, to refer the matter to a rapid, low-cost adjudication process rather than a full court case. The rules differ enough between states, on what counts as a valid payment claim, strict response deadlines, and how adjudication determinations get enforced, that they deserve their own dedicated walkthrough, which BillyPaid covers state by state in a companion guide to Security of Payment Act rules across Australia.

Which small claims tribunal handles unpaid invoices in your state?

It depends where the debtor is based, and the limits vary more than most business owners expect. Every state and territory runs a low-cost tribunal or minor claims court division built for self-represented parties chasing a debt without a lawyer, but the dollar ceiling for that simplified process ranges from $10,000 in Western Australia up to $25,000 in Queensland, the ACT, and the Northern Territory.

Figure 4: Small claims and tribunal limits for unpaid invoices, by state, in AUD. Sources: Local Court of NSW; VCAT; QCAT; Magistrates Court of Western Australia; Legal Services Commission of SA; ACAT; NTCAT; Magistrates Court of Tasmania.

State/Territory	Body	Small claims / minor limit	Above that threshold
NSW	Local Court, Small Claims Division	$20,000	$20,000 to $100,000 (General Division)
VIC	VCAT, Civil Claims List	$15,000	Higher claims can still be filed, without the small claim cost protections
QLD	QCAT, minor debt dispute	$25,000	$25,000 to $150,000 (Magistrates/District Court)
WA	Magistrates Court, Minor Case Claim	$10,000	$10,000 to $75,000 (General Procedure Claim)
SA	Magistrates Court, Civil (Minor Claims)	$12,000	$12,001 to $100,000 (Civil General Claims)
ACT	ACAT, civil disputes	$25,000	Requires the other party’s agreement above $25,000
NT	NTCAT, small claims	$25,000	$25,000 to $250,000 (Local Court)
TAS	Magistrates Court, minor civil claim	$15,000	$15,000 to $50,000 (General Division)

Filing in the right division matters for cost as much as speed. Claims that stay within a state’s small claims or minor limit are generally designed to proceed without needing a lawyer, and several jurisdictions restrict legal representation or limit cost recovery specifically to keep the process accessible for a business owner filing on their own behalf.

When is it time to use a debt collector or a lawyer?

As a last resort, once the earlier stages have genuinely failed. The Australian Government’s own guidance on debt collection services recommends exhausting friendly reminders, informal negotiation, and a letter of demand before handing a debt to a collection agency, since doing so signals a real breakdown in the relationship and can further strain it. When it is warranted, most Australian debt collectors work on a no-recovery-no-fee basis, charging a commission that typically runs 5% to 30% of the amount recovered, with older or smaller debts generally attracting the higher end of that range.

Figure 5: Typical commission range charged by Australian debt collection agencies. Source: Australian Government, business.gov.au.

A lawyer becomes the more relevant option once a debt is disputed, once it clears the threshold for a statutory demand, or once a tribunal claim has resulted in a judgment the debtor still refuses to pay, since enforcing a judgment (garnisheeing wages, seizing assets, or bankruptcy proceedings for an individual) is itself a legal process. For most small businesses, the combination of a consistent reminder cadence and a properly worded letter of demand resolves the debt long before either a collector or a lawyer becomes necessary.

The Bottom Line

Most unpaid invoices in Australia never need a court, a tribunal, or a lawyer to resolve. Around 80% are collectible by email alone, and a structured, escalating reminder cadence closes most of the remaining gap on its own. The legal tools exist for the invoices that survive every earlier stage: a letter of demand to formalize the request, a statutory demand once a company owes at least $4,000 and the 21-day clock becomes useful leverage, a state tribunal claim once the amount fits within a $10,000 to $25,000 limit depending on where the debtor is based, and construction-specific security of payment rights for trade debts. The practical priority for most small businesses is getting the early stages right, since a consistent, well-timed reminder sequence resolves the large majority of overdue invoices before any of the legal escalation steps in this guide ever become necessary. BillyPaid’s payment reminder tool runs that sequence automatically on every invoice, so the first and most effective rung of the ladder happens by default.

Frequently Asked Questions

How much does a debt have to be before you can issue a statutory demand in Australia?

At least $4,000. Under section 459E of the Corporations Act 2001 and Corporations Regulations 2021 reg 5.4.01AAA, a statutory demand must relate to a debt, or the total of two or more debts, of at least $4,000. Once served, the company has exactly 21 days to pay, negotiate, or apply to the court to have the demand set aside.

Which Australian state or territory has the highest small claims limit for unpaid invoices?

Queensland, the ACT, and the Northern Territory all cap simple tribunal debt claims at $25,000, through QCAT, ACAT, and NTCAT respectively. Western Australia has the lowest ceiling for a minor case claim, at $10,000, before a business has to move to the Magistrates Court’s General Procedure Claim stream.

What happens if a company ignores a statutory demand?

It is presumed insolvent. Under section 459C(2) of the Corporations Act 2001, a company that fails to comply with a statutory demand within 21 days is presumed insolvent, and the creditor can apply under section 459P to have the court wind the company up without separately proving insolvency, as long as that application is filed within three months of the demand’s compliance period ending.

Do you need a lawyer to chase an unpaid invoice in Australia?

Usually not for the early stages. Friendly and firm reminders, and a written letter of demand, are designed to be sent without legal help, and state small claims tribunals like QCAT, VCAT, and NCAT are built for self-represented parties. A lawyer becomes more useful once a debt qualifies for a statutory demand or the other side disputes the claim, and debt collection agencies, which typically charge a commission of 5% to 30% of what they recover, are a further option before litigation.

Sources and References

1. Australian Government, business.gov.au: Debt Collection Services (2026)
2. AustLII, Corporations Act 2001 (Cth), Section 459E
3. AustLII, Corporations Act 2001 (Cth), Section 459J
4. Federal Court of Australia, Corporations Information Sheet 1: Winding Up Proceedings Based on an Unsatisfied Statutory Demand
5. Finlaysons Lawyers, Statutory Demands: Permanent Increase to the Statutory Minimum (2021)
6. Local Court of New South Wales, Civil Jurisdiction
7. VCAT, Before You Apply: Goods and Services Disputes
8. QCAT, Minor Debt Disputes
9. Magistrates Court of Western Australia, Civil Jurisdiction Factsheet
10. Legal Services Commission of SA, Law Handbook: Minor Civil Actions
11. ACAT, Civil Disputes
12. NTCAT, Jurisdiction
13. Magistrates Court of Tasmania, Minor Civil Claim ($15,000 or less)
14. DLA Piper, Security of Payment in Australia: State-by-State Legislation Overview
15. Chaser, The 2026 Accounts Receivable Report (163 validated responses, UK/Australia-led, fielded late 2025-early 2026)

Note: All figures verified as of November 2026.