My Customers Aren't Paying Me — What Should I Do?

Start with a courtesy reminder as soon as payment is overdue — it might just be an oversight. If that doesn't resolve it, escalate in clear stages: a follow-up, a formal letter of demand, and, if necessary, a debt collection service or a small claims tribunal. The Australian Government's own guidance follows this same escalating structure.

1. Check the contract or agreement. Confirm the payment terms you actually agreed to — in writing if possible, or through emails or texts if the agreement was verbal.

2. Send a courtesy reminder. Phone, email or letter — keep it friendly and direct. Ask if there's a reason for the delay and confirm what's owed and by when.

3. Follow up again if there's no response. A second, slightly firmer reminder, with a clear new deadline.

4. Send a letter of demand. A formal written notice, which you can draft yourself or have a legal professional prepare, setting out the debt and a final deadline before further action.

5. Consider a debt collection service. Engaging one signals the matter is being taken seriously, and can prompt payment on its own — let the customer know before you do this.

6. Consider mediation or legal action. For unresolved amounts, a nationally accredited mediator or a small claims tribunal may be the next step, depending on the amount involved.

• Put payment terms in writing, up front. Due dates, accepted payment methods, and what happens if payment is late — agreed and signed before work starts.

• Invoice immediately. The sooner the invoice goes out, the sooner the clock starts — and delay on your end can make it easier for a customer to delay on theirs.

• Ask for a deposit on larger or new-client work. Reduces your exposure if things go wrong later in the relationship.

• Make paying easy. Multiple payment methods, including card and online options, genuinely does reduce the time it takes to get paid.

• Do basic checks on new or high-value customers. A background check or trade reference before extending credit costs little and can avoid a much larger loss later.

Chasing payment feels uncomfortable, particularly with a customer you want to keep. But a business that's consistently paid late by the same client isn't really being subsidised by patience — it's quietly funding that client's cash flow with its own. A clear, professional process protects the relationship better than letting resentment build silently while nothing is said.

• Do I have written payment terms that every new customer agrees to before work starts?

• Am I invoicing the moment work is complete, or letting it slide?

• Do I have a consistent process for following up overdue invoices, rather than deciding case by case?

• Is there a customer I've been avoiding chasing, and why?

The Australian Government sets out the full escalation process for recovering money you're owed, including your rights under Australian consumer law.

business.gov.au — What to do when you haven't been paid https://business.gov.au/finance/financial-trouble/what-to-do-when-you-havent-been-paid

• a customer owes a significant amount and isn't responding to reminders;

• you're unsure of your legal position under a written or verbal contract;

• you want payment terms and invoicing processes set up properly to prevent this recurring; or

• unpaid invoices are becoming a genuine, recurring cash-flow problem rather than an occasional one.

→ My Business Is Making a Profit — So Why Is There No Money in the Bank?

→ What Is a Cash-Flow Forecast — and How Do I Build One?

→ How Can I Improve My Business Cash Flow Without Simply Cutting Costs?

SKC Accounting | Knowledge Centre | Knowledge Guide 017

Last reviewed: August 2026

General information only. This guide does not take into account your individual circumstances and is not a substitute for professional accounting, taxation, legal or financial advice.