The 9 options — every realistic route, side by side
Most "how to chase an invoice" content lists three or four options and stops there. This page covers nine — every realistic path an Australian creditor might take from invoice-overdue to write-off — with verified cost, timeline, and success-rate data for each.
| Option | Cost | Time to outcome | Best for debt size | Effort | Success rate | AU-specific note |
|---|---|---|---|---|---|---|
| 1. Phone / email follow-up | Free | Days | Any | Low | ~30% | Always do this first; document every contact in writing |
| 2. Formal written overdue notice | Free | 1–2 weeks | <$2k | Low | ~35% | Sets up the evidence trail for any later LOD or court claim |
| 3. Payment plan negotiation | Free | 1–4 weeks | Any | Medium | High when accepted | Get it in writing, signed, with default clauses |
| 4. Letter of demand (lawyer letterhead) | $29 (SydneyCollect) — $450+ (full firm) | Days | Under $10k undisputed; up to $50k disputed | Low | ~55–65% if undisputed and lawyer letterhead | Should include statutory interest reference; required evidence for most courts |
| 5. Invoice factoring / discounting | 1–4% of invoice per month outstanding (varies) | Same week | $5k+ (most facilities have minimums) | Low | N/A (sale, not recovery) | Trade-offs: you lose 1–4%; factor takes over the customer relationship; many require portfolio commitment, not one-offs |
| 6. Debt collection agency | 15–30% commission, no-win-no-fee common | 2–8 weeks | $1k–$50k | Low | ~35–50% | Must be ACCC/state-licensed; ASIC/ACCC Debt Collection Guideline applies |
| 7. Small claims tribunal (NCAT NSW) | $58–$117 filing | 6–12 weeks to judgment | Under $40k (NSW) | Medium | ~70% when judgment obtained | NCAT $40k limit; legal costs generally not awarded |
| 8. Local / District Court | $200–$1,000+ filing, plus legal fees | 3–9 months | $10k–$750k (varies by court) | High | ~70% with legal representation | NSW Local Court: up to $100k; District Court: up to $750k; costs usually recoverable |
| 9. Statutory demand (Corporations Act s459E) | $200–$500 (solicitor drafting) | 21 days response window | $4k+ (company debtor only) | Medium | Very high if uncontested — triggers insolvency presumption | Only against Pty Ltd companies; non-payment is grounds for winding-up |
Success rate estimates are aggregated from CreditorWatch, ASBFEO, and Atradius industry research, and reflect typical B2B debts in their respective size brackets. Individual outcomes vary materially based on debtor solvency, dispute status, and time elapsed since invoice issue.
Recommended sequence by debt size
The optimal sequence depends almost entirely on debt size. Below the bracket where escalation cost exceeds the debt, you stop early. Above it, you progress through the ladder.
Under $500
Phone and email only. Send a polite written reminder after 14 days, a firmer one after 30. Do not escalate beyond this — the cost of any paid recovery action exceeds the debt. If you have many debts in this bracket, consider tightening your upfront payment terms instead of chasing.
$500–$5,000
Sequence: phone/email follow-up → formal written reminder → $29 letter of demand → write-off if all three fail. NCAT is technically available, but at this debt size your time cost in preparing and attending a hearing often exceeds the recovered amount. Debt collection agencies usually have minimum debt thresholds that exclude this bracket.
$5,000–$20,000
Sequence: phone/email → letter of demand → choose either NCAT (under $40k, cheap, fast, no lawyer needed) or a debt collection agency (low effort, 15–30% commission off recovered amounts). NCAT is preferred if you have time to prepare; an agency is preferred if you have many similar debts and want to outsource.
$20,000–$100,000
Sequence: phone/email → letter of demand (consider a full-firm letter at $125–$450 rather than the $29 option, since escalation is more likely) → NSW Local Court (up to $100k). Engage a solicitor; legal costs are usually recoverable from the debtor if you succeed.
Over $100,000, or company debtor at $4k+
Engage a solicitor before doing anything else. For company debtors at $4k+, a statutory demand under Corporations Act s459E is typically the fastest route: the company has 21 days to pay or face winding-up proceedings. For non-company debtors at $100k+, NSW District Court has jurisdiction up to $750k.
Australian regulatory context you need to know
Five rules and thresholds that shape what you can and can't do:
- Limitation period — 6 years (NSW). Under the Limitation Act 1969 (NSW) s14, a simple contract debt is statute-barred 6 years after it became due. Most other states are also 6 years. Once statute-barred, the debt cannot be enforced through the courts. See statute of limitations on debt in NSW.
- NCAT jurisdiction — $40k (Consumer & Commercial Division). Above $40k you move to the NSW Local Court ($100k), then District Court ($750k), then Supreme Court (unlimited).
- Statutory demand threshold — $4,000. Statutory demands under Corporations Act s459E can only be served on companies for debts of $4,000 or more. The 21-day response window is strict.
- Statutory pre-judgment interest — ~9% pa (NSW). Under the Civil Procedure Act 2005 (NSW), the Local Court can award pre-judgment interest. Include the calculation in your letter of demand using our debt + interest calculator.
- GST and bad debts. If you wrote off the invoice and accounted for GST on it, you can claim a decreasing GST adjustment in the next BAS — preserving the GST you remitted on the invoice. This is one reason to formally write off rather than continue chasing indefinitely.
Industry timing reality — when "overdue" actually means trouble
The average days-to-payment for B2B invoices varies materially by industry. Construction averages around 65 days (Atradius); professional services closer to 35. An invoice that is 60 days late from a construction client is statistically normal; the same lateness from a professional services client is a leading indicator of trouble.
CreditorWatch's Business Risk Index data shows that two formal payment defaults on a debtor's file correlates with a 42% probability of business failure within 12 months; three or more pushes it past 60%. The implication: the longer you wait, the lower your recovery probability — not linearly, but in steps tied to your debtor's underlying solvency. See average time to get paid by industry for sector-by-sector benchmarks.
The cost of chasing — when to stop
Use our debt + interest calculator to estimate both the recoverable amount (principal + statutory interest) and the cost of each escalation step. The decision rule is simple: if the expected recovery (success probability × debt amount) is less than the cost of the next step, stop. For most B2B invoices under $500, this rule says stop after the free phone-and-email steps. For invoices over $5k, it almost always says proceed to a letter of demand. For invoices over $20k, it typically says proceed to NCAT or solicitor engagement.
Frequently asked questions
Sources
- Limitation Act 1969 (NSW) s14 — 6-year limitation period for simple contract debts — legislation.nsw.gov.au
- NCAT Consumer and Commercial Division — fees and jurisdiction up to $40,000 — ncat.nsw.gov.au
- Civil Procedure Act 2005 (NSW) — statutory pre-judgment interest framework — legislation.nsw.gov.au
- Corporations Act 2001 (Cth) s459E — statutory demand framework — legislation.gov.au
- CreditorWatch — Business Risk Index and payment-default failure-rate data — creditorwatch.com.au
- Atradius — Payment Practices Barometer Australia (industry payment terms) — atradius.com
- ASBFEO — Small business payment times research — asbfeo.gov.au