You have done the work, sent your invoice and chased payment. The customer keeps promising to pay, stops replying, or raises a complaint once payment is due.

The right response depends on whether the customer disputes the debt, cannot pay, or simply will not.

Check your right to be paid

Before taking action, gather the documents that support your claim, including:

• The contract, accepted quote or purchase order;
• Any agreed terms and conditions;
• Emails or messages about price, scope and variations; and
• Delivery records, timesheets or other proof the work was done.

Also check that you are pursuing the right party. A trading name may belong to a company, a partnership or an individual.

What if the customer simply isn’t paying?

First, confirm the invoice was received and ask why it has not been paid. It may be a simple oversight.

If promises are broken or reminders ignored, send a written demand. It should identify the debt, explain why it is owed, set a deadline and say what you will do if it is not paid. Any instalment plan should be realistic and in writing, including what happens if a payment is missed.

What if the customer disputes the invoice?

Ask the customer to explain the problem in writing. A complaint does not automatically defeat your claim, but consider it before going further. If part of the invoice is accepted, ask for that amount now. Be careful about accepting a part payment offered “in full and final settlement”.

When should you go to Court?

If a demand does not work, Court proceedings may be needed. In South Australia, the Uniform Civil Rules 2020 (SA) generally require Pre-action Steps first, such as a Final Notice or a Pre-Action Claim. An ordinary reminder may not be enough.

You can find out what the Pre-action Steps include at the following article: Can I sue you? | PGC Legal.

What about a statutory demand?

If the customer is a company, a statutory demand may be an option. It is a serious insolvency step and should not be used for a genuinely disputed debt. If it is, the demand may be set aside, and you may be ordered to pay the company’s costs.

Is it worth pursuing?

Weigh the amount owed against your evidence, the likely legal costs, your time and the customer’s ability to pay. Winning does not mean you recover all your legal costs, and a judgment does not guarantee payment.

How can PGC Legal assist?

PGC Legal can review your unpaid invoices and advise on a practical recovery strategy.

Please contact Brenton Priestley, Partner, Peter Charatsis, Partner or Jonathan Khoury, Special Counsel on (08) 8221 6162.

This article is general in nature and does not constitute legal advice.