Before you start
When taking steps to get your invoices paid, it can help to keep a few things in mind.
Not being paid impacts your business (and you)
A lack of cash flow can affect your ability pay your bills on time, to invest in your business and your professional development, and impact your health and wellbeing. Your work should be paid for as agreed.
Your business relationships are important
We know that maintaining your reputation and building good business relationships are critical to creating a long career in the arts. Particularly for self-employed artists and arts workers, and particularly when you’re starting out, making and leaving a good impression is vital.
But remember: Business relationships go two ways. It’s not okay for another business not to pay for work you have done.
Behaving professionally encourages others to do the same
Your actions go a long way to establishing the standards of behaviour in your working relationships. They show how you expect to be treated and invite the people you are working with to do the same. This applies to both positive and negative behaviours.
And remember: Even if you don’t feel like a professional yet, particularly when you’re starting out, behaving like a professional is a good first step to being treated like one.
Spending large sums on debt recovery can impact your business (and you)
Taking formal actions to recover unpaid amounts can be costly. Sometimes it can cost more to recover an amount than the time and effort is worth financially. Deciding on the best course of action may ultimately be a business decision.
Steps for getting your invoices paid
You can try some or all of the steps below that work for you and that help you achieve what’s most important for you and your business.
Step 1: Start by checking your invoice
Check that your invoice has the required information. For example:
- There are different requirements for regular invoices compared with tax invoices. Learn more about invoicing.
- Some businesses and organisations may ask for certain details to be included on the invoice. For example, they may have asked for you to include a purchase order number or a quote number on your invoice.
Invoices that don’t have the right information can cause delays.
Step 2: Check in with your client
It’s always possible that the person or business who owes you money has forgotten or made a mistake. Some organisations may have certain administrative processes that that can cause delays. A friendly check in with a reminder that payment is due can be a good first step.
Building and maintaining relationships is important in the creative sector. Giving your clients the benefit of the doubt in the first instance can help build good will and preserve these important connections.
You can download this Friendly payment reminder template from the Victorian Small Business Commission to help you draft your letter. You can take the same approach in any state or territory.
At this point, you might learn that:
- there is an issue with the invoice, which you can then fix
- there are concerns about your work or the service you have provided. There is information below about what to do if there is a payment dispute.
Step 3: Send an overdue notice
If you know that the late payment isn’t a genuine error, sending an overdue notice is a good next step. Make sure the overdue notice is clear.
Include:
- the amount owed
- when you expect payment by
- clear instructions on how to pay.
You can download this Overdue payment reminder template from the Victorian Small Business Commission to help you draft your letter. You can take the same approach in any state or territory.
Step 4: Send a final payment notice
If the reminder doesn’t work and the late payment date passes, consider sending a final payment notice.
Non-payment can be frustrating and cause financial difficulties, but it’s important to stay professional.
You can download this Final notice template from the Victorian Small Business Commission to help you draft your letter. You can take the same approach in any state or territory.
Step 5: Talk to them directly
Talking to the business directly can remind them that a real person is being impacted by the late payment. It’s also much harder to ignore a person than it is to ignore an email.
Giving the business one last opportunity to make payment might help you avoid taking formal legal action. If it can be resolved at this point, you also stand a better chance of preserving the relationship.
If your invoice still hasn't been paid, you might consider legal action. The first step in the legal processes is to write a letter of demand.
A letter of demand:
- tells the business that they must pay the amount owed or you will take legal action
- doesn’t commit you to taking legal action — but you should know what your options are before sending it. Learn more about deciding what path to take.
How to write and send a letter of demand
It’s important to remember:
- Only send one of these letters. If there is no response, your next step is legal action, not another letter of demand.
- Keep a record of your letter of demand and proof you have sent it (such as by registered post). A letter of demand can be used as evidence that you have tried to resolve the payment dispute yourself before starting legal proceedings.
- Don’t harass the business or person who owes you payment. If you do, they can make a formal complaint to the police or a government department that deals with these kinds of things.
- Don’t pretend to be someone else. It’s against the law to impersonate a lawyer or the police.
- Don’t send anything that looks like it’s come from a court. This is against the law.
You can write a letter of demand yourself or you can ask a lawyer to write it for you.
Writing one yourself
You can use our letter of demand template.
There are other good resources available that can help you write a letter of demand, including:
- Write a letter of demand – Business.gov.au
- When to use a letter of demand – NSW Small Business Commission
- Information sheet: Debt recovery letter of demand (PDF) – ArtsLaw
Asking a lawyer
You can ask a lawyer to prepare a letter of demand for you. They will usual charge a fee to do it.
A lawyer will generally use their letterhead for a letter of demand, which can show the other business that you are serious about recovering the amount. This approach can be worthwhile if significant amounts of money is owing or you have a complex contract in place.
“A letter of demand serves two purposes. First, it warns the debtor of your intention to commence legal proceedings unless payment is made and gives the debtor one more opportunity to pay. Secondly, the letter is a document which may be tendered in evidence during court proceedings as written proof of your claim of the debt owed and your attempt to settle the matter.”
— Arts Law Case study:
A gallery sells your work on consignment but won’t pay – what do you do?
Disputes over the amount owed
Disputes over amounts generally happens when a client (the business or organisation that hired the contractor) disagrees with the invoiced amount.
Go back to your contract
Check what you agreed to at the outset.
- Are you charging for things that weren’t agree to?
- Could your invoice be clearer about how you’ve added up labour or costs?
- Would reissuing your invoice help?
If you don’t have anything writing, or if your written agreement or contract doesn’t properly account for the work you ended up doing, it will be much harder to enforce payment.
Learn more about contracts for self-employed artists and arts workers before entering into your next contract.
If the client isn't happy with the work
Start by trying to understand more about what the client is not happy with.
- Have you taken longer than you promised?
- Did a delay cost them money?
- Are they unhappy with the quality of the work?
- Did you only deliver on some but not all of what you promised?
- Did you deliver something different than you promised?
If you can see their side of the story, you might be able to negotiate an outcome with them. Negotiations are hard if you think you have delivered on your promises.
Check your contract for any process for dealing with this type of issue. For example, it may state that you should be given an opportunity to rectify your work, or set out where disputes should be referred to.
On the other hand, pursuing a payment dispute can cost a lot of time and money. Coming to a mutual agreement on how to settle the issue might end up being a business decision. It can also help you maintain the business relationship if it’s one you want to keep.
If you can’t agree on an amount to be paid, you’ll need to decide what to do next.
Decide what to do next
If you can’t resolve your contract or payment dispute by yourself, it may be time to seek expert help. For example, you can try:
- mediation
- a debt collection service
- going to court.
There are a range of organisations and services who can give you information about your options.
Learn more about getting help with unpaid invoices.
Reduce the risk of it happening again
There are things you can do to lower the risk of a contract dispute or unpaid invoice in the future.
Keep learning:
More in this section:
Getting help with unpaid invoices and contract disputes
If you can’t resolve your contract or payment dispute by yourself, there are places you can go for help.
