Letter of Demand Template (Australia): Free and Copy-Ready

A letter of demand is a formal letter asking a client to pay an overdue invoice by a set date, and telling them what you'll do if they don't. It's the last step before a tribunal or court claim, and on its own it gets a lot of unpaid invoices paid: a clear, accurate demand shows you're serious without costing you a lawyer.

Below you'll find three copy-ready letter of demand templates (a first demand, a final demand and a payment-plan offer), what to attach as evidence, how to send it, what you must not say, and what to do if it's ignored, including the small claims limits in every Australian state and territory. This is general information, not legal advice; for large or complex debts, talk to a lawyer or your state's legal aid service.

When to send a letter of demand

A letter of demand comes after your normal reminders have failed. A typical escalation for a small business looks like this:

Step	When	What to send
1	Due date	Nothing yet, or a friendly "due today" reminder
2	1 to 3 days overdue	Polite reminder with the invoice attached
3	About 14 days overdue	Firmer reminder, asking when payment will be made
4	About 21 to 28 days overdue	Final notice, with a phone call
5	About 30 days or more overdue	Letter of demand with a clear deadline
6	After the deadline	Small claims tribunal or local court, or a debt collector

Send it earlier if the client stops responding, disputes nothing but simply doesn't pay, or tells you they won't pay. Send it later, or not at all, if the client has raised a genuine dispute about the work; sort that out first. See our payment reminder email sequence for steps 1 to 4.

Is a letter of demand legally required?

In most Australian states, no law says you must send a letter of demand before you sue for an unpaid invoice. Government guidance treats it as the expected step before legal action, because it gives the other party a chance to pay before things escalate.

South Australia is the exception. SA's courts use a pre-action Final Notice form that gives the recipient 21 days to respond before a claim can be filed. If your client is in SA, use that form as your letter of demand.

What to include in a letter of demand

Based on the business.gov.au checklist and template:

The heading "Letter of demand" at the top.
Your business name, ABN and contact details, and the date.
The client's correct legal name and address. Send it to the business owner, who may not be the person you dealt with.
The amount owed and what it's for: invoice numbers, dates and amounts.
A deadline to pay: 7 days is the business.gov.au template; 14 days is common; SA's Final Notice uses 21 days.
How to pay: bank details, PayID or a payment link.
What you'll do if they don't pay, but only action you're genuinely prepared to take.
Interest, but only if your contract or terms allowed for it.
Copies of the supporting documents (see the evidence pack below).
Your signature.

Keep it accurate, polite and factual. A letter of demand can end up in front of a tribunal, so write it as if a magistrate will read it.

Your evidence pack: what to attach

This is where most letters of demand are weak, and where you can make yours hard to argue with. Attach:

The accepted quote or contract, ideally showing when the client accepted it. This proves they agreed to the price and scope.
The invoice or invoices, unchanged from what you sent.
Proof the client received the invoice, such as the delivery email, or open-tracking showing when they viewed it. That answers "we never got it".
Your reminder history: dates of each reminder and any replies.
A statement of account showing every invoice, payment and credit, and the balance now owing. See statement of account.

InvoiceSonic keeps each of these in one place: quotes your client accepted online, invoices with open tracking, automatic reminder history, and the client's full payment history.

Letter of demand template (Australia)

Template 1: first letter of demand

LETTER OF DEMAND

[Your business name]
ABN [number]
[Address] · [Email] · [Phone]

[Date]

[Client's legal business name]
[Attention: owner or director's name]
[Address]

Dear [name],

Unpaid invoice [number]: [amount] now [number] days overdue

On [date] you engaged [your business name] to [brief description of work],
as set out in the quote you accepted on [date]. We completed the work on
[date] and issued invoice [number] for [amount] on [date], due [date].

Despite reminders on [dates], the invoice remains unpaid.

We now demand payment of [amount] within [7/14] days of the date of this
letter, by [date].

You can pay by bank transfer to BSB [number], account [number],
account name [name], using reference [invoice number], or by PayID [PayID].

If payment is not received by [date], we intend to [lodge a claim with
(tribunal or court) / refer the debt to a debt collection agency] to
recover the amount owed, without further notice.

Copies of the accepted quote, the invoice, our reminders and a statement of
your account are attached. If you believe any part of this amount is not
owed, please contact me by [date] with the reason.

Yours sincerely,
[Name]
[Title], [business name]

Template 2: final letter of demand

FINAL LETTER OF DEMAND

[Your business details, date, client details as above]

Dear [name],

Final demand: invoice [number], [amount]

We wrote to you on [date] demanding payment of [amount] for invoice
[number] by [date]. We have not received payment or any response.

This is our final demand. Unless [amount] is paid in full by [date],
we will lodge a claim with [tribunal or court] without further notice.
We will seek the amount owed and any costs and interest the
[tribunal or court] allows.

Payment details: [bank details / PayID], reference [invoice number].

Yours sincerely,
[Name, title, business name]

Template 3: demand with a payment-plan offer

LETTER OF DEMAND

[Your business details, date, client details as above]

Dear [name],

Unpaid invoice [number]: [amount]

Invoice [number] for [amount], due [date], remains unpaid despite our
reminders on [dates].

We demand payment of [amount] by [date]. If you cannot pay the full
amount by then, we are willing to accept [number] instalments of
[amount], with the first payment due [date], provided you confirm this
arrangement in writing by [date].

If we do not receive full payment or a written payment arrangement by
[date], we intend to [lodge a claim with (tribunal or court)] without
further notice.

Payment details: [bank details / PayID], reference [invoice number].

Yours sincerely,
[Name, title, business name]

If the client accepts a payment plan, put it in writing and track each instalment. See recording an overdue invoice payment plan.

How to send a letter of demand

Email gets it there fastest, and you can attach the evidence pack.
Registered post with signed proof of delivery gives you evidence it was received, which is what business.gov.au recommends. Keep the delivery card.
Many businesses do both: email the same day, and post a signed copy.

Keep a copy of exactly what you sent and when.

What not to say in a letter of demand

The ACCC and ASIC debt collection guideline (RG 96) was written for consumer debts, but says many of its principles also apply to business debts, particularly small business. Don't:

threaten action you can't take, aren't authorised to take, or don't intend to take;
make the letter look like a court document, or as if it came from a lawyer when it didn't;
say or suggest that legal action has started or that a court has ruled when that isn't true;
say non-payment is a criminal or police matter;
add fees or charges you don't have a contractual or legal right to add.

Harassment, coercion and misleading conduct can breach the Australian Consumer Law. If your client is a consumer, such as a homeowner, be especially careful with tone and contact frequency.

Can you charge interest or late fees?

Only if your contract, quote or terms and conditions said so before the work started. There's no general law that lets one business add interest to another's unpaid invoice. If you go to court, the court can award interest on the debt in many cases. In NSW, for example, the Local Court can add pre-judgment interest except on claims under $1,000. For future jobs, put your late-payment terms in your quotes and invoices.

If the letter of demand is ignored: small claims by state

Most unpaid invoices for small businesses fall within a state tribunal or local court's small claims process, which is cheaper and less formal than a full court case:

State or territory	Where to claim	Small claims limit
NSW	Local Court, Small Claims Division	Up to $20,000
Victoria	VCAT Civil Claims List (small claims under $15,000), or the Magistrates' Court	VCAT small claims under $15,000; Magistrates' Court up to $100,000
Queensland	QCAT, minor civil dispute (minor debt)	Up to $25,000, excluding interest
Western Australia	Magistrates Court, minor case	Up to $10,000 (general claims up to $75,000)
South Australia	Magistrates Court, minor civil action	Up to $12,000 (Final Notice required first)
Tasmania	Magistrates Court, minor civil claim	Up to $15,000 (raised from $5,000 in December 2023)
ACT	ACAT, civil disputes	$25,000 or less
Northern Territory	NTCAT, small claims	Up to $25,000; claim within 3 years

Filing fees vary by state and claim size. In Queensland, for example, a QCAT minor debt claim costs roughly $96 for claims up to $1,000, $164 up to $10,000 and $406 above that.

If your client is a company: statutory demand

If the client is a company and the debt is at least $4,000, a statutory demand under the Corporations Act is another option. The company then has 21 days to pay or apply to have the demand set aside, and if it does neither it's presumed insolvent. Statutory demands have strict formal requirements, so most businesses use a lawyer for them. They don't apply to sole traders.

Other options

Small business disputes: the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) helps with business-to-business disputes, including access to mediation. If a large business is paying you late, ASBFEO also takes complaints about large business payment times.
Construction work: if you're a tradie or subcontractor, your state's security of payment legislation may give you a faster route to payment through a formal payment claim. Check your state's rules before sending a standard demand.
Debt collectors: an agency can chase on your behalf, usually for a fee or a percentage of what they recover.

If you've received a letter of demand

Don't ignore it. Check whether the amount is right, and if you dispute it, reply in writing before the deadline explaining why. If you owe the money but can't pay in full, offer a payment plan. Free help is available from community legal centres and, for individuals, financial counsellors through the National Debt Helpline (1800 007 007).

Prevent the next one

Many overdue invoices get paid after a well-timed reminder, before a demand is ever needed. Clear payment terms on the quote, a due date on every invoice and automatic reminders do most of the work. InvoiceSonic sends reminders for you, shows when a client has opened an invoice, and keeps accepted quotes and payment history ready if you ever need them. Start with the free invoice generator, and read about your rights with overdue invoices in Australia.

Frequently asked questions

What is a letter of demand?
A letter of demand is a formal letter asking someone to pay a debt by a set date, and stating what you'll do if they don't, such as lodging a tribunal or court claim. It's usually the last step before legal action.

Is a letter of demand legally binding?
No. A letter of demand doesn't create a new legal obligation; the debt comes from your original agreement. It formally puts the client on notice and shows a tribunal or court you gave them a fair chance to pay.

Do I need a lawyer to send a letter of demand?
No. Businesses can write and send their own letter of demand. Consider a lawyer for large or disputed debts, statutory demands against companies, or if the client has a lawyer.

How long should I give them to pay?
Seven days is the business.gov.au template and 14 days is common. In South Australia, the pre-action Final Notice gives 21 days. Whatever you choose, state an exact date.

Can I send a letter of demand by email?
Yes. Email is fast and lets you attach evidence. Business.gov.au recommends also sending it by registered post with signed proof of delivery, so you can prove it was received.

Can I add interest or late fees to a letter of demand?
Only if your contract or terms allowed for interest or fees before the work began. Adding charges you have no right to can breach debt collection guidelines. A court may award interest if you go to court.

What happens if a letter of demand is ignored?
You can lodge a claim in your state's small claims tribunal or local court, use a debt collector, or for company debts of $4,000 or more, consider a statutory demand. Most small business invoice claims fall within small claims limits of $10,000 to $25,000.

What's the difference between a final notice and a letter of demand?
A final notice is usually your last reminder before formal action. A letter of demand is the formal step itself: it sets a deadline and says what action you'll take. In South Australia, the court's pre-action form is called a Final Notice and works as the letter of demand.