Customer won't pay for work done? How to chase unpaid invoices

When a customer won't pay for work done, the fix usually starts long before a letter of demand. Knowing how to chase unpaid invoices is as much a part of the trade as knowing how to fit a hot water system, and most late payers aren't trying to rip you off. They forgot, they're waiting on their own pay, or something in the invoice confused them. A clear invoice and a steady, polite reminder schedule get most of them paid. For the few who still don't pay, there's a set of next steps, and you should know them before you need them.

Late payment is common, not personal. Xero's small business data for the June 2026 quarter shows Australian small businesses were paid an average of 6.0 days late, with customers taking an average of 22.9 days to pay an invoice (Xero, August 2026).

Start before the job: terms that make chasing easier

The easiest invoice to chase is one the customer agreed to before you started. Put your payment terms on the quote, and make sure the customer has said yes to them.

• When payment is due. Seven days, or on completion, suits most household work.
• Any deposit or progress payments, with the amounts.
• How to pay: bank transfer, card, or both.
• What happens if they pay late. If you want to charge interest or recovery costs on overdue amounts, it has to be in the terms they agreed to. You can't add it afterwards.

Make the invoice easy to pay

A surprising number of late payments are really confusing invoices. Before you blame the customer, check yours has:

• A clear due date, as a date, not "net 7"
• The total, including GST, in large type
• Your BSB, account number and the reference to use
• A link they can open on their phone, and card payment if you offer it
• A short description of the job, so they recognise it
• Your phone number for questions

If you're registered for GST, there are also details the law requires on a tax invoice. They're listed in tax invoice requirements in Australia.

A reminder schedule that works

Decide the schedule once and use it every time. Doing it every time is what makes it work.

Send reminders during business hours, keep each one short, and always include the invoice number, the amount and a way to pay.

Wording you can copy

Change the names and numbers and these are ready to send.

Notice what these do. Every one names the invoice, the amount and the next step. The early ones give the customer an easy way out ("if it's already on its way"). The later ones offer to fix a problem, because a customer who is unhappy with the work won't pay until someone talks to them.

Make the phone call

Text and email are easy to ignore. A call usually isn't. When you call, ask a question rather than making an accusation: "I am just checking on invoice 1042. Is there anything holding it up?" Then listen. The answer tells you which path you're on:

• They forgot. Send the link while you're on the phone.
• They can't pay it all now. Agree a payment plan, put it in writing, and keep the dates short.
• They're unhappy with the work. Deal with the complaint first. Go back if you need to. Then ask for payment.
• No answer, and no reply. Move to the final notice.

When they still don't pay

If the final notice passes with no payment and no plan, you have several options. Work through them in order.

1. Stop further work for that customer until the account is settled, if your terms allow it.
2. Send a letter of demand. It sets out what is owed, why, and the date by which it must be paid before you take action. You can write one yourself, or have a lawyer send it, which often carries more weight.
3. Use a small claims process. Every state and territory has a way to recover smaller debts through a local or magistrates court, or a tribunal, usually without a lawyer. In New South Wales, the Local Court's Small Claims Division hears claims up to $20,000 (NSW Local Court). In Queensland, QCAT hears minor debt claims up to $25,000, excluding interest (QCAT). Other states set their own limits and fees, so check your state court or tribunal before you file.
4. Use a debt collection agency. Most charge a commission on what they recover.
5. Get help with the dispute. The Australian Small Business and Family Enterprise Ombudsman has free information and dispute support for small businesses at asbfeo.gov.au.

Stop it happening again

Most of what makes chasing hard happens before the invoice:

• Take a deposit on bigger jobs and progress payments on longer ones
• Invoice the day you finish, while the customer is still pleased
• Keep terms short for household customers
• Make paying a two-tap job on a phone
• Run the same reminder schedule on every invoice, every time

The money side of this, including why a profitable business can run short of cash, is covered in cash flow for tradies.

The short version

Agree payment terms before the work. Send a clear invoice the day you finish. Remind before the due date, then at 1, 7 and 14 days overdue, with a phone call in there. Offer to fix any problem with the work. If none of that works, send a final notice, then a letter of demand, then use your state's small claims process.