Late Payment Law in Australia

What you're legally owed

When a B2B invoice goes unpaid in Australia, the governing statute is Contractual late fees + Payment Times Reporting Act 2020 (reporting only) + Australian Consumer Law (unfair terms). It gives freelancers and small suppliers automatic rights to statutory interest and a flat compensation fee on every overdue invoice — no contract clause required.

Statutory interest

Contractual (typically 10–15% per year) or court-set pre-judgment interest (~RBA cash rate + 6%)

~10.35% per year statutory pre-judgment in early 2026

Flat compensation fee

Contractual (not statutory)

late fee (contractual)

Default payment term

Contractual; large businesses must report payment times to small suppliers under PTRA 2020

Public sector max

20 days (federal government contracts under AUD 1m)

These amounts accrue automatically from the day after the invoice due date. You do not need a contract clause to invoke them — the statute creates the right directly. A contract can set a higher rate, but not a lower one.

How to enforce it in Australia

The primary enforcement path for freelancers in Australia is the State small claims tribunal / Local Court.

Each state and territory runs its own tribunal for small claims. NSW NCAT handles consumer-trader disputes up to AUD 40,000; Victorian VCAT up to AUD 15,000 for goods/services disputes. For B2B debts above tribunal limits, file in the Local Court / Magistrates Court.

Small claims limit: Varies by state — NSW AUD 20,000 (Local Court small claims), VIC AUD 15,000 (VCAT).

Official portal: www.ag.gov.au

What to do this week

1. Add a late-fee clause citing PTRA 2020 / ACL to your contract template. Use the freelance contract template as a starting point.
2. Add one line to your invoice footer: “Late payments accrue interest under PTRA 2020 / ACL at Contractual (typically 10–15% per year) or court-set pre-judgment interest (~RBA cash rate + 6%), plus a Contractual (not statutory) late fee (contractual).”
3. When an invoice goes overdue, use the free late-fee calculator to get the exact amount owed, then send a formal demand letter citing the statute. The demand letter guide walks through exactly what to include and what to leave out.
4. If the letter's deadline passes, run the escalation playbook — or file directly via the State small claims tribunal / Local Court, which is designed to be used without a lawyer for undisputed debts.

One thing most freelancers don't know

Australia's Payment Times Reporting Register publicly lists how long every large company takes to pay its small suppliers. It doesn't enforce payment, but it creates reputational pressure that has measurably reduced average payment times since 2020.