How to Chase Overdue Invoices in Australia (Without Losing the Client)

You finished the job. You sent the invoice. The due date came and went, and your bank account still hasn't moved. Now you're stuck in the worst part of running a small business: chasing money you've already earned, without coming across as the bad guy.

You're not imagining it either. The federal government's own Payment Times Reporting Scheme tracks how big companies pay their small business suppliers, and even they can't keep to their own terms - in Reporting Cycle 9 (January to June 2025, published February 2026), only 66.5% of small business invoices were paid on time, and some suppliers were still waiting up to 64 days despite an average agreed term of just 29 days, unchanged from the cycle before. The regulator's own summary: the slowest payments are getting even slower. If companies with finance departments run that late, a one-person trade business needs a system even more.

The good news: most overdue invoices get paid after a single, well-timed follow-up. This guide walks through exactly how to chase an overdue invoice in Australia, with copy-and-paste email and phone scripts, when you can add late fees, and how to escalate if it comes to that, all while keeping the relationship intact.

How Long Before an Invoice Is Considered Overdue in Australia?

An invoice is overdue the day after the due date you agreed with the client. Australia has no single law that sets a standard payment term for ordinary commercial invoices, so the term is whatever you put on the invoice, or whatever you agreed before the job started.

Common Australian payment terms look like this:

• Payment on completion - due the day the work is finished, typical for small call-outs and repairs
• 7 days - a fair default for most residential trade jobs
• 14 days - common for mid-size jobs and newer commercial clients
• 30 days EOM - end of the month following, the standard trade-account term with builders, developers, and larger commercial clients

If you never stated a due date at all, the general legal position is that payment is expected within a "reasonable time," which is vague and hard to enforce. That alone is a reason to always put a clear due date on every invoice you send, and to make sure it meets the Australian tax invoice requirements so there's no excuse to bounce it back for a fix.

Here's the key mindset shift: an overdue invoice is not a personal slight, and most clients who pay late simply forgot or it's stuck behind someone else's approval. Your job is to make remembering easy, not to start a fight. The earlier and more calmly you follow up, the faster you get paid.

Step-by-Step: How to Follow Up an Unpaid Invoice (Email + Phone Scripts)

A consistent escalating sequence recovers the vast majority of late payments. Keep each message short, factual, and friendly. Always re-attach the invoice and include your BSB and account number so there's zero friction to paying.

Step 1 - Gentle reminder, on or a day or two after the due date. Assume the best. This is a nudge, not a chase.

Subject: Invoice #0142 from [Your Business] - due today

Body: Hi [Name], just a quick note that invoice #0142 for [job] is due today. I've attached it again here for convenience. Payment can go to BSB [your BSB], account [your account number], reference #0142. Any questions, just give me a shout. Cheers, [Your Name]

Step 2 - Follow-up, around a week after the due date. Slightly firmer, still warm.

Subject: Invoice #0142 - now overdue

Body: Hi [Name], I haven't seen payment for invoice #0142 come through yet, so I wanted to check it landed okay. I've reattached it. If it's already on its way, ignore this. If there's anything holding it up, let me know and we'll sort it. Thanks, [Your Name]

Step 3 - Phone call, around two to three weeks overdue. A two-minute call often does what three emails can't. People find it much harder to ignore a friendly voice. Keep it light:

"G'day [Name], it's [Your Name] from [Business]. No dramas, I'm just following up on invoice #0142 from a couple of weeks back. Is everything sweet your end with that one? ... Good on ya, when do you reckon you'll be able to get that sorted?"

The aim of the call is a specific commitment: a date. Once they say "I'll pay it Friday," you have something concrete to hold them to, and you can send a short email confirming what you both agreed.

Step 4 - Firm final notice, around 30 days overdue. Professional, clear, and with a deadline.

Subject: Final reminder - invoice #0142 outstanding

Body: Hi [Name], invoice #0142 for A$[amount] is now well overdue. Please arrange payment by [date, 7 days out]. If there's a problem, please contact me before then so we can agree a plan. If I don't hear back, I'll have to consider further steps to recover the amount. I'd much rather sort this directly. Regards, [Your Name], [Trading name], ABN [your ABN]

Notice that even the firm notice still offers a way out and keeps the door open. You're being clear about consequences without being aggressive, which protects the relationship if they were just genuinely stuck.

When to Charge Late Payment Fees (and How to Set Them Up)

Australia has no set legal interest rate for overdue commercial invoices, and no automatic right to add one after the fact. What you can charge depends entirely on what you and the client agreed to before the job started.

To charge a late fee or interest legitimately:

• State it before the work starts. Put the fee or interest rate in your quote, your terms of trade, and on the invoice itself. The client needs to have agreed to it upfront, not discover it after the due date has passed.
• Keep it reasonable. A fee should reflect a genuine cost of late payment, not act as a punishment. An unreasonably high rate risks being challenged, especially if the client is a consumer or another small business.
• Show it clearly on the invoice. A short line such as: "Interest applies to balances unpaid after the due date, as set out in our terms."

In practice, the most powerful use of a late fee isn't collecting it, it's mentioning it. A line like "just a heads up, interest kicks in after Friday" in your Step 3 or 4 follow-up often prompts payment on its own. Many tradies waive the fee the moment the client pays, using it purely as gentle leverage rather than extra income.

Escalating Overdue Invoices: From Reminder to Formal Action

A small number of clients will ignore everything above. Here's how to escalate in order, from cheapest and friendliest to most formal.

1. Formal written demand. A clear letter or email stating the amount owed, the original due date, and a firm deadline (usually 7 to 14 days) before you take further action. Keep it factual. This is often the wake-up call that gets a stalling client moving, because it signals you're serious.

2. Your state or territory tribunal. Australia doesn't have one national small-claims body - each state and territory runs its own low-cost tribunal for civil and small-business disputes, such as NCAT in New South Wales (claims up to A$100,000), VCAT in Victoria, or QCAT in Queensland (claims up to A$25,000). Filing fees and limits change from time to time, so check your own state or territory tribunal's website for the current figures before you apply. It's designed to be used without a lawyer.

3. Debt collection agency. For stubborn or larger debts, a commercial debt collection agency can take the chase off your plate entirely, usually for a percentage of what they recover or a flat fee. They're most useful once the customer is clearly avoiding you and the amount justifies the cost, because it typically ends the relationship. For most tradie-sized invoices, your state or territory tribunal is the better first stop.

4. Security of payment legislation (for builders and subbies). If you work on construction contracts, every Australian state and the Northern Territory has its own security of payment legislation, starting with New South Wales in 1999. It lets you issue your invoice as a formal payment claim and, if the payer doesn't respond properly within their state's timeframe, moves the dispute into a fast statutory adjudication process rather than a slow court case. Whether it covers work for an owner-occupier on their own home varies by state - NSW removed that exclusion in 2021, but South Australia still excludes owner-occupier residential work, so don't assume it applies without checking. The exact process and timeframes differ by state, so check with a construction lawyer or your state's building or fair-trading authority before relying on it, but it's a genuinely powerful tool many subbies don't use.

Note: this is general information, not legal advice. For a specific situation, talk to a lawyer or your state's small business commissioner.

The honest truth is that escalation past a written demand is rare when your invoicing and follow-up are tidy from the start. Which is exactly where the real win is.

How to Prevent Late Payments Before They Happen

Chasing is treating the symptom. Preventing late payment is treating the cause, and it's far less stressful. The habits that matter most:

• Agree clear terms in writing before the job. A short text or email confirming the price and the due date is enough for most jobs.
• Take a deposit on bigger jobs. A part-payment upfront on larger jobs is completely normal in Australia and protects your cash if the job stretches out.
• Invoice the same day the work is done. Every day you delay sending the invoice is a day added to your wait. Invoice from your phone before you leave site.
• Always show your ABN. If your invoice doesn't quote an ABN, a business customer can be required to withhold tax from your payment at the top rate. That's a real reason a payment comes back short or late, not just a paperwork detail. The Australian invoice template has all the required fields pre-built, and the sole trader invoicing guide walks through getting set up properly.
• Make paying effortless. Put your BSB and account number on every invoice and every reminder, not just the first one.
• Automate your reminders. The single biggest fix. Every invoice gets the same polite follow-up, automatically, so nothing slips and you never have to feel awkward.

How Invio Sends Automatic Payment Reminders So You Don't Have To

Everything in this guide works. The catch is that it relies on you remembering to do it, on a Friday afternoon, after a full day on the tools, every single time. That's where it breaks down for most people.

Invio's automatic payment reminders run the chase for you. You set your terms once, and every overdue invoice gets a polite, professionally worded reminder on schedule: a nudge on the due date, a follow-up a bit later, and a firmer note if it's still unpaid. Your BSB and account number ride along on every message, so paying is a single tap for the client. Read the payment reminders guide to see exactly how the sequence works.

The result is the same outcome you'd get from disciplined manual chasing, without you having to remember, write the email, or feel like a nag. You stay focused on the work, and the system quietly gets you paid.

Stop chasing, start automating. Invio sends payment reminders for you, free on your first 3 invoices ever, no card required for up to 5 invoices a month. Create your free account or compare plans to unlock unlimited invoices and unlimited automatic reminders.