Prevent most of it before you start
The majority of late payments are created at quoting time, not at payment time. Four things move the needle more than any amount of chasing:
- Written terms, agreed up front. Days to pay, accepted payment methods, deposit and any interest on overdue amounts — on the quote, before the job.
- A deposit. A customer who has paid something is materially more likely to pay the rest, and you are not funding materials out of your own pocket.
- Progress payments on longer jobs. Staged billing keeps exposure small. If a payment stops, you find out at stage two instead of at the end.
- Invoicing on the day. An invoice sent a fortnight after completion is a fortnight of terms you gave away, and it arrives when the customer's memory of the work has already faded.
The escalation
Run the same sequence every time, and let the calendar rather than your mood decide when to move to the next step.
| When | Do | Tone |
|---|---|---|
| 3 days before due | Courtesy reminder with the invoice attached again | Helpful — this one is admin, not chasing |
| Day 1 overdue | Short email or text: invoice number, amount, due date passed | Friendly, assumes it was missed |
| Day 7 | Phone call, then confirm in writing what was agreed | Direct. Ask for a payment date |
| Day 14 | Written notice: pay by a stated date, reference the agreed terms | Formal, no hostility |
| Day 30 | Letter of demand | Formal, with a consequence stated |
| Beyond | Debt collection, dispute resolution, or small claims | Commercial decision — weigh cost against the amount |
Make the first reminder easy to act on
Most first reminders fail because they force the customer to go looking for something. Include everything needed to pay in the message itself: invoice number, amount, the date it was due, what the work was, and the bank details. Attach the invoice again rather than referring to it.
Call rather than email at the seven-day mark. It is uncomfortable exactly once, and it resolves a category of non-payment that email never will — the customer who has a question about the invoice and has been quietly sitting on it instead of asking.
The letter of demand
A letter of demand is a formal notice, and it is the point where an unpaid invoice becomes a documented dispute. It should state:
- Who owes what — amount, invoice number, and what the work was
- The terms that were agreed and the date payment became due
- A clear deadline for payment
- What you will do if that deadline passes
- How to pay
Keep it factual. The value of the document is that it is unambiguous and dated, not that it is forceful. business.gov.au publishes guidance and a template for writing one.
When to stop chasing yourself
At some point the hours you spend are worth more than the debt. Options past the letter of demand include a debt collection service, low-cost dispute resolution through the Australian Small Business and Family Enterprise Ombudsman, or your state's small claims tribunal. All three cost something — time, a percentage, or a filing fee — so make it a commercial decision rather than a matter of principle.
Keep the record straight
Every step above depends on knowing exactly what is outstanding and what was said. Invoice status on the job, payments recorded against the invoice, and staged amounts marked off as they land — that is the difference between a two-minute reminder and an afternoon of reconstruction. It is also what makes your BAS straightforward at the end of the quarter.
Sources
Escalation practice on this page follows business.gov.au guidance on payment terms, what to do when you have not been paid and writing a letter of demand. General information only, not legal advice.