Don’t Let Unpaid Invoices Ruin Your Holiday Season
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Do You Have Unpaid Invoices Before Christmas?
December should be a great month for business, but for many sole traders and SMEs it’s the most stressful time of year. Clients slow down, accounts departments go on leave, jobs wrap up late, people are travelling and everyone wants to push everything into January. Suddenly, you’re left with chasing unpaid invoices right when cash flow matters most and people are least likely to want to pay because of their own holiday spending commitments.
The good news is that there are practical and quick steps you can take before Christmas to increase your chance of getting paid and keep cash flow steady.
1. Start with a phone call (it works more often than you think). Before going straight to legal action, make a follow up call. December is a busy time for everyone, and many invoices aren’t paid because they simply fall through the cracks. Then, send a follow-up email with the original invoice attached, check if anything further is needed and give them a clear but reasonable timeframe to action payment (e.g. within 2 business days). If this is ignored, or payment isn’t received, it’s time to remove all uncertainty.
2. Send a second follow-up email and make sure you refer to the agreed payment terms, confirm the overdue amount and new deadline (e.g. end of day), and be clear that you may need to escalate the matter to debt recovery if payment isn’t received. Then, if that doesn’t result in payment, you take legal action.
3. Engage a law firm to send a formal letter of demand. This sets out what is owed, the basis of the debt, the evidence supporting it and a strict deadline for payment (usually 7-14 days). Most importantly, this shows your client or customer that you’re willing to take further action if required. Many of our clients see action after taking this step.
Before engaging a lawyer to send a Letter of Demand or start recovery action, it’s important to make sure the debt justifies the cost. As a general guide, having a law firm prepare a formal Letter of Demand will usually cost around $330, depending on the complexity and the amount of supporting documents involved. For most businesses, it becomes worthwhile to involve a lawyer once the debt is around $1,000–$1,500 or more, or where the debtor has been consistently avoiding payment. For smaller amounts, a strong self-written reminder or final notice may be the more cost-effective option. That said, if the unpaid amount is linked to ongoing services, a difficult client, or you’re concerned about deeper issues (like insolvency), seeking early advice can prevent bigger losses or issues down the track.
4. If the debt is small to moderate, your state or territory’s civil tribunal may be the quickest and most cost-effective option. Every state has its own tribunal (e.g. QCAT in Qld, NCAT in NSW, VCAT in Victoria), each with different monetary limits and processes. You often don’t need a lawyer to file, though getting legal guidance can strengthen your evidence and submissions. Importantly, tribunal applications can usually be lodged online at any time, even over the holiday period and hearing dates for matters lodged in December/January are typically allocated early in the new year (so act sooner rather than later on this). For larger or more complex debts, the Magistrates/Local, District/County or Supreme Court may be more appropriate, and your lawyer can advise you on what this involves.
5. If you know payment won’t come before Christmas, there are several strategic measures that can protect you in the new year:
- Collate all quotes, invoices, emails, texts, delivery records.
- Stop providing further goods or services until the debt is paid.
- Review overdue accounts and consider whether stronger terms (deposits, staged payments, written contracts) are needed for 2026.
These measures put you back in control and assist in preventing the issue from growing.
If the amount is significant, the debtor is unresponsive, or you think they’re trying to delay things until everyone is on leave for the holidays, getting legal advice early often saves money and stress. A short conversation with our litigation team can help you understand your rights, choose the fastest pathway, and avoid wasting time on steps unlikely to succeed.
