There are a number of avenues to try if a customer has not paid their invoice.
A first step is to call or email them as a friendly reminder that payment for their invoice is due.
If unsuccessful, the next step is to send them a letter of demand (template available to download). This is a more formal letter requesting immediate payment and warning that legal action will be taken if payment is not made.
You then have two further options for debt recovery:
- You may wish to look into using the services of a debt collection agency. A debt collection agency can recover the debt on your behalf and can issue the letter/s of demand to the customer and can take legal action for you. Each agency will have different payment structures, but most will charge a certain percentage of commission based on the amount of debt. Some agencies will not charge you if they are unable to cover the debt.
- Alternatively, you can lodge a claim in court. You can lodge a Minor Civil Claim in the Magistrates Court as it hears debt recovery disputes for amounts up to $12,000. Matters in the Minor Civil Claim Division of the Magistrates Court are conducted with minimal formality and you would not be entitled to legal representation. If the debt is between $12,001 and $100,000, you can lodge a General Civil Claim in the Magistrates Court, which is more formal and allows legal representation. Claims over $100,001 can be heard in either the District or Supreme Court. Prior to lodging a claim in court, you must first send a notice of intention to sue (by way of a Letter of Demand or a more formal Pre-Action Notice of Claim)
This process has various costs, such as legal and filing costs. We recommend seeking legal advice for large debt recovery claims.
If you need any assistance with debt recovery, please contact the Workplace Relations team on (08) 8291 2000 or via email at wr@mtasant.com.au.
