Debt Recovery Procedures in Australia: From Letter of Demand to Court Proceedings When a client or customer fails to pay, small businesses face cash-flow challenges. Australian law offers a clear pathway to recover unpaid debts—starting with a formal letter of demand and, if necessary, escalating to tribunal or court. Follow these five steps to recover what you’re owed. 1. Send a Letter of Demand Issue a written letter setting out the amount due, the basis for the debt, a payment deadline (usually 7–14 days), and the next steps if unpaid. You can draft your own or use a template like Form N1. Keep proof of delivery (email read-receipt or registered post). 2. Negotiate & Agree a Payment Plan If the debtor can’t pay in full immediately, propose an instalment plan. Document any agreement in writing, specifying amounts, dates and consequences of default. This often preserves relationships and avoids legal costs. 3. Small Claims Tribunal (Debts ≤ $20,000) For smaller debts...