What to do when you haven't been paid

Getting paid for the work you've done can be challenging. Most of the time, having a polite and professional discussion with the other business can help to clear up any misunderstanding.

If this doesn't help, there are other measures you can take to recover money owed to you.

On this page you can find:

Warning signs that you might not get paid

The customer is avoiding payment:

  • The customer asks you for an extension to pay.
  • You’ve only received partial payments.
  • You hear that others haven’t been paid .
  • The customer asks you for a discount if they pay in cash.
  • The customer's preferred payment method is by cheque.

There's a change in customer's behaviour:

  • The customer doesn’t return your phone calls or respond to emails (or there’s a delay in their response).
  • There’s a pattern of cancelled or missed appointments.
  • The customer makes excuses (e.g. computer is down, the cheque signatories are away) or breaks their promise.
  • The customer is becoming more difficult, aggressive or criticises your work.
  • The customer praises you excessively and unnecessarily.
  • The customer uses words such as ‘just this once’, ‘I promise’, ‘this is the last time’.
  • The customer is often away or they are unexpectedly closed during business hours.
  • The customer's words don’t match their actions.

The customer is having some personal problems or issues with their business:

  • The customer has health concerns, marriage / family difficulties.
  • Other work has fallen through, they haven't been paid by people who owe them money.

The customer's reputation comes into question:

  • You hear that the customer has a high staff turnover, disgruntled employees, or other work not being paid for or completed.
  • The customer is using a different business name.
  • A background check you do tells a different story (e.g. a credit history, licence or reference check).

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What to do when you haven't been paid

Review the terms of your contract

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

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.

Read our Understanding contracts topic or consider getting some legal advice if you’re having problems understanding the contract terms.

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Send a reminder

A missed payment could just be a general oversight. Get in touch with your customer to give them a reminder, discuss a payment date or negotiate a payment schedule. You can do this by phone, email, letter or in person.

You can find templates on Business Victoria's website to help you with written contact including:

If you're contacting by phone or in person:

  • Try to find out why the payment hasn't been received. For example:
    • a misunderstanding (around the payment date, amount owing or required payment method)
    • the product/service met the customer's expectations - if it hasn't, could you provide a discount
    • the customer is experiencing issues (computer/accounting glitches, temporary cash flow problems)
    • the customer's business failing
  • Try to reach an agreement on a payment date or negotiate a payment schedule.

Use Business Victoria's script template (34.04KB) to help with these conversations.

Be sure to keep records of your interactions. You may need these records if you want to take the matter further.

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Consider whether it's worth pursuing the debt

Look at your options and consider whether the money and time you need to invest in pursuing the payment outweighs what the invoice is worth.

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Put it in writing

If your customer hasn’t responded to reminders, send a letter of demand, or talk to your lawyer about drafting one up for you.

Be aware that you have legal obligations when contacting other businesses regarding debt. To find out what they are, read the debt collection information on the Australian Competition and Consumer Commission website.

At this stage you may consider not doing any further work for the customer until they pay the outstanding invoice.

Tip: Getting a lawyer to draft a letter of demand may prompt a quick payment.

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Seek advice

Consider getting advice from:

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Get help with dispute resolution

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

Read Understand and manage your dispute on the Australian Small Business and Family Enterprise Ombudsman website. The website offers:

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.

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.

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Outsource to a debt collection agency

If the debt is not recovered after friendly reminders, informal negotiations and a letter of demand, you might decide to engage a debt collection service.

Read the Debt collection guideline for collectors & creditors on the Australian Competition & Consumer Commission (ACCC) website for information about how debt collectors work.

Tip: Let your customer know that you plan to pass the matter over to a debt collector. This may prompt them to pay the debt prior to further action.

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Take legal action

When all other options have been exhausted, you may consider taking legal action.

Depending on the amount of money in dispute, you can seek legal advice or lodge a claim with the Small Claims Tribunal.

Find out where to go for legal assistance on the Australian Small Business and Family Ombudsman's website or read our information about going to court over a dispute.

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Report non-paying customers

Report a non-paying customers to a credit-monitoring organisation. This could warn others of the risks of doing business with them.

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