You finished the job. You sent the invoice. The due date came and went. Now your messages are getting read receipts and no replies, and you're doing that thing where you refresh your banking app every morning hoping the money has magically appeared.
It hasn't.
Late payment is one of the most common problems in the trades, and one of the most badly handled. Most tradies either chase too softly and get ignored, or lose their temper and say something that kills any chance of getting paid. Neither works.
Here is the escalation sequence that actually gets money in the bank - and what to say at each stage.
The short answer
Start with a polite SMS reminder on the due date, then a formal email with a 7-day payment deadline. If unpaid after that, send a written final demand. For debts under $100K, VCAT (VIC) and NCAT (NSW) handle these without a lawyer and cost under $100 to file. Don't threaten what you won't follow through on.
Before you chase anything - get your paperwork right
Before you send a single message, make sure you have the basics in order. You cannot chase a payment you cannot prove you are owed.
Check you have:
- The original signed quote or scope of work.
- A valid tax invoice with your ABN, the correct amount, and the due date on it.
- Any variation approvals - written, not verbal.
- A record of when the job was completed.
- Any photos, day logs, or site notes that document the work.
If your invoice is missing your ABN, has no due date, or doesn't say "tax invoice" at the top, fix it before you send the first reminder. A sloppy invoice gives a non-payer an easy excuse to delay further.
If you need to tighten up how your invoices are structured, the Invoice Generator in Smart Tools produces ATO-compliant invoices with all required fields. It takes about two minutes.
1. The same-day SMS nudge (due date)
Send this on the day the invoice is due. Not a week later. The day it's due.
Keep it short, professional, and low-pressure. The goal at this stage is to catch honest forgetters, not to escalate. Most late payments are not malicious - they are someone who got busy and moved on.
What to say
"Hi [name], just a quick heads up - invoice #[number] for $[amount] was due today. Bank details are on the invoice if you need them. Let me know if you have any questions."
That's it. No passive aggression. No "as per my last message." No "just circling back." Just a plain, human reminder.
If they respond with a payment date, note it in writing. If they respond with a dispute, deal with that separately - do not let a disagreement about one line item become a reason to withhold the whole invoice.
2. The formal email - 7-day deadline (3 days after due date)
If the SMS gets no response and no payment by day three, escalate to a formal email. This is still professional, but the tone shifts. You are now creating a paper trail.
What to say
Subject: Overdue Invoice #[number] - Payment Required Within 7 Days
"Dear [name],
Invoice #[number] for $[amount], issued on [date] for work completed at [address], remains unpaid. Payment was due on [due date].
Please arrange payment within 7 days of this email. Bank details are included on the attached invoice.
If there is a reason for the delay or a query about the invoice, please contact me directly so we can resolve it.
[Your name]
[Business name]
[Phone number]"
Not sure how to word it for your specific situation - a long-term client, a builder you want to keep working with, someone who's been difficult from the start? Open Smart Chat and describe the situation. It will draft the email for you, and you can go back and forth to adjust the tone until it sounds like you. A lot of tradies use it to take the edge off writing something they know needs to stay professional when they're genuinely annoyed.
Attach the original invoice to this email. BCC yourself so you have a timestamped record in your inbox.
Do not send this from a personal email if you can help it. A business email address looks more serious and is harder to ignore.
3. The written final demand (7 days after formal email)
If the 7-day deadline passes with no payment and no response, send a final demand letter. This one explicitly states what happens next if they do not pay.
The key rules for a final demand: be specific about the amount, the original invoice date, the deadline, and the consequence. Do not threaten anything you will not actually do. If you say "I will take legal action in 7 days," you have to be prepared to do it.
What to say
"FINAL NOTICE - OVERDUE PAYMENT
To: [Client name and address]
From: [Your business name and ABN]
Date: [Today's date]
This is formal notice that the following amount remains unpaid and overdue:
Invoice #[number]: $[amount]
Invoice date: [date]
Original due date: [date]
Work completed at: [address]
Full payment of $[amount] is required within 7 days of this notice.
If payment is not received by [date], I will commence proceedings to recover the debt through [VCAT / NCAT / QCAT / your state tribunal], without further notice. Filing costs and any associated legal costs may be added to the claimed amount.
Payment details: [BSB, account number, account name]"
Send this by email and, if you have their address, by registered post. The combination of both creates a clear record that they received it.
If you need the final demand to sound firm without tipping into aggressive, use Smart Chat the same way: paste the facts, tell it what outcome you want, and ask for a professional final notice. It is useful when the message needs to be serious, but you still want the door open for payment without a fight.
4. The Security of Payment Act - for commercial and construction work
If you are doing commercial, construction, or subcontracting work, you have a faster option than tribunal before you even get to the final demand stage.
The Building and Construction Industry Security of Payment Act applies in every Australian state and territory. It allows you to issue a formal payment claim that puts the legal obligation on the other party to respond within a set timeframe - usually 10 to 15 business days depending on your state.
If they do not respond with a payment schedule disputing the amount, they owe you the full claimed amount and you can enforce it without going to court.
The Act covers most trade work - electrical, plumbing, construction, fitout, civil works. Domestic building work where the client is the homeowner is covered in most states, but the rules vary. If your unpaid invoice is over $10,000 and involves commercial or construction work, it is worth reading your state's version of the Act or getting 15 minutes of advice from a construction lawyer before you proceed.
Fair Trading in your state can point you to the right resources. New South Wales tradies can start at Fair Trading NSW.
5. Tribunal - VCAT, NCAT, and the rest
If the final demand goes nowhere, file with your state tribunal. This is not as daunting as it sounds. These tribunals exist specifically to handle disputes without requiring lawyers, and the filing fees are low.
- Victoria: VCAT handles civil claims. The Minor Cases List covers debts up to $100,000. Filing online costs around $80 for most trade debt claims. Hearings are often conducted by phone or video. You do not need a lawyer.
- New South Wales: NCAT handles general consumer and commercial disputes. For construction disputes, NSW Fair Trading can also assist with dispute resolution before you file.
- Queensland: QCAT handles minor civil disputes up to $25,000. Larger amounts go to the Magistrates Court.
- Other states: Most have a similar civil and administrative tribunal or magistrates court process for recovering debts without legal representation.
When you file, bring everything: the signed quote, the invoice, all emails and text messages, photos of the completed work, and any day logs or site notes. The more documented your case, the less you have to argue on the day.
The Day Log tool in Smart Tools is exactly for this - a timestamped record of what was done, when, and by whom. If you have been using it consistently, your evidence file practically builds itself.
6. Debt collectors - when they make sense
A debt collection agency is worth considering when the amount is significant, your other options have not worked, and you would rather hand the problem to someone else than spend time in tribunal.
Debt collectors typically charge a commission of 15-25% of what they recover, or a flat fee upfront. They do no work on debts they do not think are collectable, so if they take your case on, that is a reasonable signal that you have a legitimate claim.
They are generally not worth using for amounts under $2,000 once their commission is factored in. For larger amounts from a commercial client, they can be effective.
7. How to avoid this situation next time
The most effective debt recovery is not chasing - it's setting up conditions where non-payment is much less likely before work starts.
Three things that make a meaningful difference:
Require a deposit. A 20-30% deposit upfront on any job over $500 filters out the clients most likely to dispute or disappear at the end. Someone who won't pay a deposit before work starts is showing you exactly how they will behave when the invoice arrives.
Put payment terms in writing before the job. Your quote should state when payment is due, how it can be made, and what happens if it's late. The Terms and Conditions Generator in Smart Tools produces trade-specific T&Cs you can attach to every quote - it takes two minutes and means you're not scrambling to explain your terms after the fact.
Get variations signed before doing extra work. The most common trigger for a payment dispute is a client who didn't expect the final amount. If the scope changed on site, get written approval before you do the work. The full process is in How to Write a Variation for a Tradie Job.
That banking app you've been refreshing every morning? The tradies who stop doing that are not better at chasing - they're better at paperwork before the job starts.
Frequently asked questions
How long do I have to chase an unpaid invoice in Australia?
In most Australian states, the limitation period for chasing a debt is six years from the date the payment was due. After six years, the debt becomes statute-barred and you cannot take legal action to recover it. Do not wait years to chase - the longer you leave it, the harder it becomes to collect and the weaker your evidence gets.
Can I charge interest on late payments?
Yes, if your contract or terms and conditions specify an interest rate for late payment. Without that clause in writing, you generally cannot add interest unilaterally after the fact. The standard approach is to include a late payment interest clause in your terms - typically 10-15% per annum calculated daily - so it applies automatically when payment is overdue.
Do I need a written contract to take someone to tribunal?
No, but it makes your case significantly stronger. VCAT, NCAT, and other state tribunals handle disputes where the contract was verbal - you just need to prove the work was done and agreed upon. Invoices, text messages, emails, photos, and day logs all serve as evidence. A written contract or signed quote removes most of the ambiguity.
What is a payment schedule under the Security of Payment Act?
Under the Building and Construction Industry Security of Payment Act, a respondent who receives a formal payment claim has a set timeframe - typically 10 to 15 business days depending on your state - to issue a payment schedule disputing the amount. If they do not respond within that window, they owe the full claimed amount and you can enforce it without going to court. The Act applies to most trade and construction work in Australia.