A customer still hasn’t paid. Should you call a debt collector?

The short answer: six steps, in order

Each step costs more than the one before it, in money, time or the relationship. Start at the top, move down only when the step above has failed, and keep a note of every contact as you go.

This is general information, not legal advice. For a large debt or a disputed one, talk to a solicitor before you take the later steps.

1. Why the debt gets older

Almost nobody decides to let an invoice go to sixty or ninety days. It happens one week at a time. The reminder email goes out on its own, and then the next step is a phone call, which needs a quiet ten minutes, the invoice in front of you, and the nerve to ask someone you know for money.

So the call waits. Meanwhile the customer pays the suppliers who ring them. The longer an invoice sits, the more it looks like you are not fussed, and the harder the eventual conversation gets.

2. Chasing unpaid invoices, step by step

Reminders

A polite note on the due date and another a week later, with the invoice attached and a way to pay in one tap. Set it up once in your accounting software and leave it running.

A phone call

Ring, say which invoice and how much, and ask when it will be paid. You are after a date, not a promise to “look into it”. If there is a problem with the work, you hear about it now, while it is still easy to fix. Write down what was said.

A payment plan

If they want to pay but cannot pay it all, agree instalments, put them in an email, and check each one lands. A plan that is being kept is worth more than a demand that is ignored.

A letter of demand

A formal letter: what is owed, what for, the date to pay by, and what you will do if it is not paid. Only say you will take a step you actually intend to take, and do not dress the letter up to look like it came from a court or a solicitor when it did not. Both are covered in section 3.

A collection agency

A good agency brings process, persistence and distance from the relationship. Section 5 covers when that is the right call and what to ask about fees.

Small claims at your state tribunal or court

Each state runs its own small claims process, and the right venue depends on where you are. Three examples, checked against the official sites:

• Queensland: QCAT hears minor debt disputes for an agreed, fixed amount up to $25,000, excluding interest, where the agreement was made no more than six years ago.
• Victoria: VCAT hears goods and services disputes, and a business can apply. The application fee for a claim of not more than $15,000 is $202.10 from 1 July 2026.
• New South Wales:a debt claim up to $20,000 usually goes to the Small Claims Division of the Local Court. NCAT’s consumer claims are brought by consumers against suppliers, so it is generally not where a business chases its own invoice.

Other states and territories have their own tribunal or Magistrates Court process. Check its site for the current limit and fee before you file, because both change.

3. The rules when you chase your own debts

The ACCC and ASIC publish a joint debt collection guideline for collectors and creditors. It applies to businesses collecting their own debts, not only to agencies. It is written with individual debtors in mind, but says much of it is also relevant to collecting business and small business debts. Among other things, it says not to:

• Ring outside reasonable hours. For phone calls it treats 7:30 am to 9 pm on weekdays and 9 am to 9 pm on weekends as appropriate, local time for the debtor, and recommends no contact on national public holidays.
• Contact too often. It recommends no more than three times a week, or ten times a month, counting contact actually made.
• Threaten legal action you do not intend, or that is not possible.
• Send a letter designed to look like a court document, or like it came from a solicitor when it did not.
• Tell other people about the debt, including family, or leave a message that lets someone else work out what it is about.
• Keep chasing someone who has clearly disputed the debt without sorting out the dispute first.

None of that gets in the way of a polite, timely call. It rules out the habits that creep in when a debt has been left too long and someone finally loses patience.

4. How long you have

The right to take a debt to court runs out. The ACCC and ASIC guideline describes the limit as varying from state to state, but usually six years, or three years in the Northern Territory, counted from when the right to sue arose or from when the debtor last acknowledged the debt, for example by making a payment.

Two practical points follow. Once the limit has passed, the guideline says you should not suggest legal action may be taken. And tribunals can set their own window: QCAT, above, takes minor debt claims only where the agreement is no more than six years old. Six years sounds like plenty, but the evidence, the contact details and the customer’s goodwill all fade well before the law does.

5. When a collector or tribunal is the right call

Collection agencies do work a small business usually cannot do for itself: tracing a customer who has moved, applying steady pressure within the rules, and taking a debt to the next stage when it needs to go there. Hand it over when:

• the customer has stopped answering you altogether
• you have sent a letter of demand and the date has passed
• the relationship is over and you only want the money
• you do not have the time or the stomach to keep going yourself

Agencies usually charge one of two ways: a commission, a share of what they recover, or a fixed fee per debt or per letter. Some charge nothing if nothing is recovered. Ask for the fee in writing, what happens if the debt goes to court, and who pays those costs, before you sign.

Go straight to the tribunal or court when the amount is fixed, the paperwork is clear, and the customer simply will not pay. If the customer says the work was faulty or the amount is wrong, that is a dispute rather than a late payment, and it is worth getting advice before either route.

6. The early call, done for you

The step that decides how many debts ever reach an agency is the phone call in the first few weeks. It is so commonly skipped that we built it into a product. Get Paid rings every overdue invoice from your live Xero ledger, reads out the balance, sends a payment link while still on the call, and records a promise to pay as a date against the invoice. A genuine dispute comes to you with the reason attached. It stops the moment a payment lands, so nobody is rung about something already paid. $199 a month, no call caps, with a 30-day free trial.

It does not send letters of demand, file claims or replace a collector. It works the rungs before them, so the ones that do reach a collector are the ones that truly need one.

Prefer to build it yourself? The Debtor Chasing standard is free: how to sort an overdue list into the invoices worth chasing, the opener that gets a date rather than a yes, and the compliance checks to run before any call. It joins to your own ledger and job system.

For why the chasing slips even in businesses with an accounts person, read overdue invoice chasing for small business.