If you have a written contract, the first thing to do is to read it carefully. Check the terms of your contract for the payment conditions and debt recovery options.

If you have an oral agreement or part oral/part written agreement, these are just as valid as a written contract – if there is proof of what was agreed.

Consider getting some legal advice if you’re having problems understanding the contract terms.

A missed payment could just be a general oversight. Get in touch with your customer by phone, email, letter or in person to:

  • give them a reminder
  • discuss a payment date
  • negotiate a payment schedule.

Debt recovery templates

Business Victoria has a number of handy templates that can help you send:

  • a friendly reminder email
  • an overdue payment second reminder email
  • a final notice email.

Visit Business Victoria to use their templates.

If your customer doesn’t respond to your reminders, send a letter of demand, or ask a legal professional to draft one for you.

Be aware that you have legal and consumer law obligations when contacting other businesses about debt. To find out what they are, read the debt collection information on the Australian Competition & Consumer Commission (ACCC) website.

If other methods haven’t worked you may need to get help to resolve the issue.

  1. The Australian Small Business and Family Enterprise Ombudsman website provides:
  2. Mediation is a common form of dispute resolution where you and your customer work with a mediator to reach an agreement. You can find a nationally accredited mediator on the Mediator Standards Board website.
  3. For consumers and small businesses dispute resolution for financial complaints, go to the Australian Financial Complaints Authority (AFCA) website.
  4. If you're still unable to reach an agreement, lodge a complaint through your state or territory's Fair Trading agency. They can act as an informal negotiator.

If you can't recover the debt after friendly reminders, informal negotiations and a letter of demand, you might decide to engage a debt collection service.


Let your customer know that you plan to use a debt collector. This may prompt them to pay the debt first.

If nothing else has worked, you might want to take legal action. Depending on the amount of money involved, you can either get legal advice or lodge a claim with a small claims tribunal.

Going to court

There are services in each state and territory that can refer you to appropriate lawyers or law firms. Some states and territories also have free or subsidised initial advice services.

Find out where to get legal assistance on the ASBFEO website.

Going to court over a contracting dispute can give you a definite outcome. But court can be costly, stressful and time-consuming. Find out what’s involved when you go to court over a dispute.

Protect your business from unpaid debt in the future

There are 5 steps you can take to protect your business from prevent unpaid debt in the future.

  1. Know who you are dealing with - before you enter into an agreement with another business, check who you're dealing with. Check out the advice on dealing with businesses and companies on Australian Securities & Investments Commission (ASIC) website.
  2. Have a signed contract – putting agreements in writing means everyone can refer to it in the case of a dispute.
  3. Use a good invoicing system – a good system will help your cash-flow, keep track of customers and help you to keep on top of money you are owed.
  4. Set up payment terms and policies that will help you get paid on time. Make sure everyone is clear about your payment timeframes and expectations.
  5. Understand your rights - make sure you're up-to-date on laws such as consumer protection and fair trading. If you aren't sure, talk to a legal professional or business adviser.

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