Letter of Demand Template: 3 Free Letters for Unpaid Invoices (Australia)

A letter of demand template gives you formal wording to ask a customer to pay an overdue invoice by a fixed date before you take legal action. In Australia a letter of demand normally states the amount owed, the invoice it relates to, a deadline of 7 to 14 days, and the step you will take if it isn't paid, usually a claim in your state's small claims court or tribunal. Copy one of the three letters below, fill in the brackets, and send it by email and registered post.

Where does a letter of demand fit when chasing an unpaid invoice?

A letter of demand is the last written step before court. It comes after your friendly reminders and a final notice have been ignored, and it tells the customer exactly what happens next if they still don't pay. Sending one too early can sour a relationship that a phone call would have fixed; sending one too late lets the debt go cold.

Most small businesses follow a ladder like this. The day counts are a sensible default, not a legal requirement:

Steps 1 to 3 are covered in detail in our guide to chasing overdue invoices in Australia. This page picks up at step 3, the point where your messages need to stop sounding like reminders.

What to include in a letter of demand in Australia

A letter of demand should let a stranger, such as a registrar or tribunal member, understand the debt without any other paperwork. That means the parties, the invoice, the amount, the deadline and the consequence, all stated plainly. There is no prescribed form for a business debt, so clarity matters more than legal language.

• The heading "Letter of Demand" and the date you send it.
• Your details: business name, ABN, address, phone and email.
• The customer's correct legal name and address. For a company, use the name on its ABN record (not just its trading name) and its registered office.
• The debt: invoice number(s), invoice date, what the invoice was for, the original due date and the amount outstanding including GST.
• A short history: the dates you sent reminders. This shows you have been reasonable.
• Any interest or fees, but only if your quote, contract or terms of trade allowed for them before the work started.
• A clear deadline written as a calendar date, not "within 14 days".
• The consequence: the specific step you will take, such as "lodge a claim in the Local Court of NSW Small Claims Division".
• How to pay: BSB, account number, PayID and the reference to use. Our guide to putting bank details on an invoice shows the format.
• A copy of the invoice attached.

What must a letter of demand not say?

A letter of demand must not threaten action you don't intend or aren't entitled to take, mislead the customer about the legal consequences of not paying, or harass them. These limits come from the Australian Consumer Law and are set out in the ACCC and ASIC debt collection guideline, which applies to businesses collecting their own debts as well as to collection agencies.

The guideline is written mainly with individual debtors in mind, but it says many of the same principles are relevant to business and especially small business debts. In practice that means:

• Don't bluff. If you write "we will commence legal proceedings", you need to be prepared to do it. Threatening action you have no intention of taking is a recognised breach.
• Don't misstate the consequences. Unpaid invoices are a civil matter. Never suggest the police will be involved, that the debt is a criminal offence, or that you can take their property without a court order.
• Don't dress it up as a court document. A letter of demand from you is not a summons. Don't use court crests or wording that implies it was issued by a court.
• Don't pressure third parties. Contacting the customer's family, employer or other clients to embarrass them into paying crosses the line.
• Keep contact reasonable. The guideline recommends contacting a debtor no more than three times a week or 10 times a month, counting actual contact rather than attempts.
• Don't add charges you never agreed. A late fee or interest rate that wasn't in your terms before the work began is very hard to justify in a letter, and harder to recover in a tribunal.

How long should you give in a letter of demand?

Give the customer 7 to 14 days from the date they are likely to receive the letter. That range is common Australian practice for a business debt and is long enough that a court or tribunal won't see it as unreasonable. There is no single statutory period for an ordinary invoice debt.

If you post the letter, allow for delivery time and set the deadline from the expected delivery date. Write the deadline as a date: "by 5:00 pm on Friday 13 November 2026" leaves no room for argument.

Don't confuse a letter of demand with a creditor's statutory demand. A statutory demand is a separate formal document under the Corporations Act that can only be served on a company, for an undisputed debt of at least $4,000, and gives the company 21 days to pay before it is presumed insolvent. It is a powerful and technical tool, and most small businesses get legal advice before using one.

Letter of demand templates you can copy

Each template below is plain text. Replace everything in [square brackets], delete any lines that don't apply, and keep the tone factual. Template 1 is a final notice to send before the formal demand. Templates 2 and 3 are formal letters of demand, without and with interest.

Template 1: Final notice letter for an unpaid invoice

Template 2: Formal letter of demand

Template 3: Letter of demand with interest claimed

Only use this version if your quote, contract or terms of trade set out an interest rate on late payments and the customer accepted those terms before the work began. Work out the interest so the customer can check it. For example, a $4,400 invoice that is 45 days overdue with agreed interest of 10% per year: $4,400 × 10% × 45 ÷ 365 = $54.25. See charging late fees on invoices for how to set those terms up properly.

Charging interest has bookkeeping consequences of its own, so ask your accountant how to record it in your books and on your BAS.

How should you send a letter of demand?

Send it two ways: by email so it arrives the same day, and by registered post so you have proof of delivery. If the matter ends up in a tribunal, you will need to show the customer received your demand, and a registered post receipt with tracking does that cleanly.

• Email: attach the letter as a PDF along with the invoice. Use a subject line like "Letter of Demand: Invoice 1042".
• Registered post: address it to the customer's legal name. For a company, its registered office is listed on an ASIC company search and is the standard address for formal documents.
• Keep a file: copies of the invoice, reminders, the demand, the postage receipt and any replies. That file becomes your evidence.
• Diarise the deadline and act on it. A demand you don't follow through on teaches the customer to wait you out.

Which small claims court or tribunal do you use after a letter of demand?

If the deadline passes without payment, the next step is usually a claim in the small claims or minor civil jurisdiction for the state or territory where the customer is based. These venues have simplified procedures, lower fees, and in many cases limit the use of lawyers. The limits below were checked against each court or tribunal website in October 2026.

NSW's tribunal, NCAT, mainly hears disputes brought by consumers about goods and services, so a business chasing an unpaid invoice in NSW normally goes to the Local Court instead. Fees and forms change, so check the venue's own website, such as QCAT's minor debt page or the Magistrates Court of WA, before you file.

A court order still has to be enforced if the customer ignores it, which is extra time and cost. Weigh that against the size of the debt. For small amounts, a payment plan or writing the debt off and claiming it as a bad debt can be the more practical end point.

What if the customer disputes the invoice or offers a payment plan?

Respond to a dispute in writing before your deadline passes, and pause the demand on the disputed part only. A tribunal will look at whether you engaged with a genuine complaint, so ignoring one weakens your claim even if you are right about the money.

If the customer agrees the debt but can't pay it all at once, a written instalment plan often recovers more than a court claim. Set out the amounts, dates and what happens if a payment is missed. Our guides to handling invoice disputes and setting up a customer payment plan include wording for both.

Most overdue invoices never reach this point. Short payment terms, a deposit on larger jobs and a reminder the day after the due date do most of the work. If you'd rather not chase by hand, InvoiceSonic sends automatic payment reminders at 7, 14 and 30 days after the due date, so you only need a letter of demand for the rare customer who ignores all three.

This article is general information, not legal advice. Debt recovery rules, court limits and fees change and depend on your circumstances. Check your state court or tribunal, the ACCC and business.gov.au, or speak to a lawyer before taking legal action.

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