The invoice is 45 days late. You've sent two reminders. The client's gone quiet, or worse, they're replying to everything except the one email that mentions money.

So you're about to write a letter of demand. Good call. It's the right step before you spend real money on collections or court.

The template's a few scrolls down. Copy it, drop your details into the bracketed fields, and send it. Before you do, here's what actually matters, plus what to do if the letter goes nowhere.

One thing up front. This is a general guide from people who chase debts for a living, not legal advice. For complex disputes or high-value claims, get proper advice.

A letter of demand is a formal written request to pay a debt by a stated deadline, with a clear consequence if the money doesn't land. It sits at the tail end of your polite chase and just before things get serious, whether that's a collection agency or court.

Send one after your reminders have been ignored and before you brief a lawyer or an agency. Most business creditors send theirs after 30 to 60 days overdue, once it's obvious the debtor isn't going to pay without pressure.

What a letter of demand is not. It's not a court order and it's not a statutory demand. A statutory demand is a specific creature under the Corporations Regulations 2001, used against companies for debts of $4,000 or more, with a 21-day window to pay or dispute before you can move to wind up the company. Different tool, different threshold, different consequences. Don't confuse them.

If you want the wider picture on the debt recovery process, the demand letter is the final pre-litigation step.

A vague demand gets ignored. A specific one gets paid. Include all of this:

• The parties. Full legal names of the creditor and debtor, plus ABN or ACN if either is a business.

• The amount owed. Total, broken down by invoice.

• Invoice numbers, dates, and any contract or PO reference so there's no wriggle room on what the debt is.

• A clear payment deadline. 7 to 14 days from the date of the letter is standard. Give a calendar date, not "within two weeks".

• The consequence if it's ignored. Escalation to a debt collection agency or legal proceedings. State it plainly.

• Payment method and bank details so paying is easier than not paying.

• Your signature, name, position, and the date.

Attach copies of the unpaid invoices. It removes their favourite excuse ("we never got it").

Copy this, drop your details into the bracketed fields, and send it. Keep the tone firm and professional. Never threatening, never abusive. That's not just good manners, it's compliance with ACCC debt collection rules on how you're allowed to contact a debtor.

[Your Business Name]

[Your ABN]

[Your Address]

[Date]

[Debtor Full Legal Name / Company Name and ACN]

[Debtor Address]

By email: [debtor email]

By registered post

RE: LETTER OF DEMAND, OUTSTANDING AMOUNT OF $[TOTAL] AUD

Dear [Debtor Name],

This letter is a formal demand for payment of $[total amount] owed

by [debtor legal name] to [your business name] for goods/services

supplied under the following invoice(s):

Invoice [number], dated [date], amount $[amount]

Invoice [number], dated [date], amount $[amount]

Total outstanding: $[total] AUD

Despite previous reminders sent on [dates], this amount remains

unpaid and is now [X] days overdue.

We require payment in full by [deadline date, 7 to 14 days from

the date of this letter].

Payment can be made to:

Account Name: [name]

BSB: [bsb]

Account Number: [account]

Reference: [invoice number]

If payment is not received by [deadline date], we will refer this

matter to a debt collection agency and/or commence legal proceedings

to recover the debt, plus any interest, recovery costs and legal

costs permitted under our terms of trade or applicable law.

If you dispute this debt, respond in writing by [deadline date]

setting out the grounds of your dispute.

We would prefer to resolve this without further action. Contact

[your name] on [phone] or [email] to discuss payment arrangements.

Yours sincerely,

[Signature]

[Full Name]

[Position]

[Your Business Name]

Attached: Copies of invoice(s) [numbers]

Send it by email and registered post. Email gives you speed and a delivery record. Registered post gives you proof of physical delivery if this ends up in court.

A word on tone. Firm and factual works. Aggressive doesn't, and it can breach ACCC contact rules if you cross into harassment or threats you can't actually carry out. If you're unsure about wording for a complex dispute, get advice, or brief someone who knows the debt collection compliance side inside out.

The letter itself is broadly the same across Australia. What changes is the court you'd escalate to if they don't pay and you decide to sue. Here's the shorthand:

Two things worth knowing. In Queensland, QCAT applicants have 90 days to serve a sealed copy of the application on the respondent. In Victoria, if the defendant does nothing within 21 days of being served, you can apply for default judgment.

The common thread is that the demand letter is the pre-court step in every state. Judges look kindly on creditors who tried to resolve things before suing.

For interstate debts, high-value claims, or anything with a dispute attached, get advice before you file. The rules on cost recovery, interest, and jurisdiction start to matter fast.

Deadline's passed. Nothing. You've got two real options.

Escalate to a debt collection agency. This is where most creditors go next, and for good reason. An agency's Final Demand on their letterhead sends a different signal than yours did. It says the creditor is no longer chasing alone, and that legal escalation is now a live possibility rather than a threat in a Word document. Good agencies work on no-win-no-fee, so the cost of trying is close to zero.

Take legal action. Depending on the amount and state, that's the Local Court, QCAT, or Magistrates' Court. Lawyer's letters and filing fees start adding up quickly, so most creditors try agency escalation first and reserve court for genuine defaulters or high-value matters.

One thing not to do. Sit on it. In most states you've got six years from when the debt became payable to sue. Sounds like ages. It isn't, especially if you're chasing multiple debts across a busy business. Read the detail on the statute of limitations so you know your window.

Keep every bit of correspondence. Your registered post receipt, email delivery confirmations, any partial payments or written acknowledgements. If this becomes a court matter, that paper trail is your case.

Here's the honest version. A DIY letter of demand works maybe half the time on debtors who can pay but haven't prioritised you. The other half quietly file it under "later" because they know you probably won't follow through.

When the next letter arrives on a collection agency's letterhead, the calculus changes. The debtor now knows the creditor has spent money on this, the file has been reviewed by professionals, and the next step isn't another email. It's a formal recovery process. Payment rates jump. Not because anyone's threatening anything they shouldn't, but because the signal is different.

At eCollect, our Final Demand goes out on our letterhead, on a no-win-no-fee basis. Turnaround is faster than a solicitor's letter and cheaper. For serious commercial matters where litigation is on the cards, E C Legal handles the legal side. For everyday overdue invoices from small business debt collection through to larger commercial debts, the Final Demand does most of the heavy lifting without needing a courtroom.

• ACCC Debt Collection Rules

• Corporations Regulations 2001

• Local Court of NSW, Civil Jurisdiction

• QCAT, Minor Civil Dispute (Minor Debt)

• Magistrates' Court of Victoria, Civil Matters