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Don’t let unpaid invoices ruin your summer



By Lynda McAlary-Smith, Victorian Small Business Commissioner  

The end of year is a critical time for most small businesses – from the hospitality sector juggling multiple functions, to retailers running their largest sales of the year, and those in professional services endeavouring to meet deadlines before holiday office closures.  

In these busy times, it can be difficult to find the time to chase outstanding payments.  

Unfortunately we see hundreds of applications from small businesses for our assistance with disputes where they’re owed money. In face 44% of all applications to the  Victorian Small Business Commission (VSBC) in the last financial year were related to unpaid money.  

We also know from data collected by CreditorWatch that small businesses are three times as likely to go unpaid as large businesses are.  

So if you’re facing challenges – you’re not alone.  

Before the year concludes, I encourage you to get on top of your outstanding accounts. I’ve listed some practical steps below to assist you in following-up unpaid invoices. 

1. Back Yourself by getting prepared 

Before you pick up the phone for what might be a challenging conversation, prepare yourself by taking a few minutes to: 

  • Gather your records: Have copies of the accepted quote, the final invoice, and any other relevant correspondence. 
  • Ensure your evidence is at-hand: Have your “before and after” images, practical completion sign-offs, or any proof of goods delivered. Producing these as a part of the discussion, or to follow it up in writing, is powerful.  
  • Write some speaking points: Jot down the key points you need to make during the call to keep the conversation on track.  
  • Choose your moment: Try to choose a time and place where you can have the conversation without being distracted or rushed. For example, don’t call when you’re rushing between jobs in the car. 
  • Be assured, you’re entitled to follow-up what’s owed to you: When you speak to your client, be firm, professional, and stick to the facts you’ve prepared. They agreed to your goods or services, and in accepting that quote they’ve agreed to pay you.  
A lady is working on her laptop, while seated at her dining table in the evening.

An AI-generated image of a business owner reviewing outstanding accounts receivable.

 2. Follow a clear process 

Securing a payment should be a methodical process.  

If you’ve already issued the invoice and sent a reminder on the due date, your next step is to follow-up with a call. That can be accompanied with an email, promising a further follow-up. This could be in a week. If they fail to make payment, you can issue a formal overdue notice. 

You can find excellent, free-to-use email and letter templates for payment follow-ups and overdue notices on the Business Victoria website: business.vic.gov.au. 

3. Escalate formally with a letter of demand 

If your calls and overdue notices are being ignored, it may be time to escalate the matter. The next formal step is to issue a letter of demand. 

This is a formal escalation that clearly states the amount owed, the work it was for, and a final deadline for payment before you consider further action. While you should be aware this can escalate the dispute, and may render an ongoing relationship difficult, it is often a necessary step for debt recovery. You can also find templates for this on the business.vic.gov.au website.

4. You are not alone: How the VSBC can help 

If you’ve followed these steps and still can’t get paid, you don’t have to go it alone. 

My team at the Victorian Small Business Commission (VSBC) is here to help you resolve commercial disputes.  

Last year our Dispute Resolution Officers (DROs) successfully resolved over a third of disputes before they required formal mediation. This preliminary service, where our DROs speak with both parties to find a solution, is provided at no cost. 

Matters which our DROs cannot resolve may be progressed to mediation, which last year resulted in 69% of matters being resolved between parties. This is a subsidised service for small businesses and available at a fee $300 per party for a half-day mediation.   

Commissioner Lynda McAlary-Smith smiling with her arms crossed

Victorian Small Business Commissioner Lynda McAlary-Smith

If you’re concerned about your financial situation, there are services available to assist you.  

The Small Business Debt Helpline offers a free financial counselling service that’s independent and confidential. Call them on 1800 413 828. 

You can also access free and confidential mental health coaching, by small business owners, from Beyond Blue called New Access for Small Business. You can access 8 free sessions without a GP referral and the support is personalised to the business challenges you’re facing. You can learn more at beyondblue.org.au/nasbo or by calling 03 9250 8305.  

Don’t let a payment dispute fester over the holidays. I encourage you to take these steps now to get your accounts in order and start the new year on a strong financial footing.