How to chase an unpaid invoice

To chase an unpaid invoice, start the day after it falls due and escalate on a timeline: a polite reminder on day one, a phone call to the accounts contact around day seven, a written final notice at day fourteen, then a letter of demand, then a small claims filing. Each step is in writing or confirmed in writing, each gives the customer a clear way to pay, and each refers to the one before it. That record is what makes the later steps work.

The guidance behind this order is consistent. The Australian Small Business and Family Enterprise Ombudsman advises negotiating first and avoiding expensive collection and legal action where possible, and business.gov.au lists the same sequence: check the contract, remind, send a letter of demand, try dispute resolution, then consider a collector or a claim. The days below are a sensible default; change them to match your own terms.

Half of chasing happens before the due date. The ASBFEO’s invoice tips are practical: find a contact in the customer’s accounts area and ask what they need to process an invoice, check the details match the order and the delivery, confirm the invoice was received, and ten days before payment is due, check it has been processed.

An invoice without the customer’s purchase order number, or sent to a general inbox, can sit unpaid without anyone refusing to pay it. The tax invoice example prints the buyer’s purchase order, the due date as a date and the payment reference in its own block, which removes three common reasons an accounts team holds an invoice. If the job started from a quote, the difference between a quote, a proforma and an invoice matters here, because only the tax invoice is the document the customer pays against.

Day 1: the reminder

Send it the business day after the due date. Keep it short: the invoice number, the amount, the original due date, a copy attached, and a question rather than a demand. “Is anything holding this up on your side?” gets a faster answer than “This is overdue.” The ASBFEO’s guidance at this stage is to contact the accounts area once payment is one to two days late and find out whether a problem has prevented it.

Many late invoices end here. A missing purchase order, a supplier record that was never set up, or an invoice stuck with someone on leave are all fixed by one reply.

Day 7: the call

If the reminder gets no reply, phone. Ask for the accounts contact by name, ask what is needed to release the payment, and ask for a date. Then send an email the same day that records what was said: “Thanks for the call today. You mentioned payment will be made by 11 August.” The ASBFEO’s dispute guide makes the point directly: keep clear written notes of discussions, because they become evidence if the matter escalates.

Be careful with frequency. The ACCC and ASIC debt collection guideline is written mainly for collecting from individuals, but it says many of its principles are relevant to business debts too. It recommends phone contact between 7:30am and 9pm on weekdays and 9am to 9pm on weekends, no calls on national public holidays, and no more than three contacts a week or ten a month. One call a week is plenty.

If the customer has several invoices open, send a statement alongside the call. The statement of account example shows a running balance and an ageing table, so a customer can match their ledger to yours before anyone argues about a single amount.

Day 14: the final notice

The final notice is the last letter before the debt leaves the business. It should do four things: set out exactly what is owed, show what has already been sent, offer ways to resolve it, and state what happens after a named date.

The overdue payment notice example is from Ridgeline Plumbing Services to Cobb and Marsh Bakery, owed $4,763 across three invoices, the oldest 66 days past due. Its structure is worth copying section by section:

• Headline figures: amount overdue, interest to date, total payable and a pay by date, in one row at the top.
• Invoices in arrears: each invoice with the work, issue and due dates, days overdue and amount.
• Interest, worked out: clause 7 of the credit application allows ten per cent a year, simple, and the notice shows the arithmetic on one invoice, $1,485.00 at ten per cent over 66 days is $26.85, plus the daily accrual of about $1.30 across all three.
• What has already been sent: five dated contacts, including the call on 4 August where payment was promised by 11 August.
• How to resolve this: four numbered options, pay in full, agree an arrangement, dispute an invoice in writing, or say the business is in difficulty.
• If nothing is received: referral to a collection agency, supply stopping, and a possible claim in the Local Court.

The order matters. The options come before the consequences, so the customer reads a way out before a threat. Interest is only charged because the customer agreed to it when the account opened; the late payment interest clause page covers how that wording is set up.

The letter of demand

If the final notice date passes, send a letter of demand. The ASBFEO describes it as the next option after you have tried unsuccessfully to get an invoice paid, and advises a polite, professional tone with copies of the contract, quote or invoice attached.

The letter of demand example from Ridgeline Landscapes to Coastal Fitouts shows the parts: the debt as a table, the work it relates to with the quote acceptance and sign off dates, a dated history of what was already sent, a demand for $6,840.00 within 14 days converted to a calendar date, what happens if it is not paid, interest and costs under the quote terms, and a way to resolve it with a payment plan deadline. It is written openly, not marked without prejudice, because it is meant to be shown to a court if a claim follows. What a letter of demand is covers the term itself.

Small claims: the last step

If the demand date passes, you have three choices: a payment plan, a mediator, or a claim. The ASBFEO’s advice is to keep talking even after filing, since a lodgement can be withdrawn if the matter settles, and to prepare the case in writing with the supporting documents.

Which court you file in depends on your state and the amount. In New South Wales, the Local Court’s Small Claims Division hears claims up to $20,000, and proceedings there are less formal, with a pre-trial review held to help the parties agree before any hearing. Other states have their own small claims courts or tribunals with their own limits, so check yours before you file. Every document from the earlier steps, the reminder, the call note, the notice and the demand, becomes part of your evidence.

The timeline at a glance

The table at the end of this article lays the steps out by day, from ten days before the due date to the point where you decide between a collection agency and a claim. Treat the days as defaults. A customer on 30 day terms from the end of the month needs the same steps on a different calendar.

Common mistakes

Waiting to be sure it is late. A reminder on day one is routine. A first reminder on day forty reads as a complaint and gets defensive answers.

Calling without writing it down. A promise made on the phone and never confirmed by email is a promise nobody can point to.

Adding interest that was never agreed. It gives the customer a reasonable reason to dispute the whole notice.

Threatening before offering. A notice that opens with court and closes with a payment plan gets read for the threat and not the plan.

Contacting too often. Several calls a day look like harassment, and the debt collection guideline treats unreasonable frequency as a problem even when the debt is real.

Build it

The letterhead page shows the four letterhead styles, masthead, ledger, monogram and underline, and a letterhead is used when a document speaks for a sender, which every chasing letter does. Follow the guide to creating a document with AI to describe the notice: the account, the invoices, the dates already sent and the options you will accept.

Documents never carry input fields, so every amount and date is written into the content rather than left as a blank. Use tables for the invoices and the contact history, a stats layout for the headline figures, and a danger callout for what happens next; there are four callout variants, info, warning, success and danger. The AI chat edits text only, which suits updating the dates and amounts for the next customer. The PDF is rendered on the server, so the copy you email and post is the same file you keep with your records.