Australia
Getting paid on time in Australia: terms, late interest and payment claims
Australia has no statutory late payment interest for business invoices. What works instead — agreed terms, government payment times and Security of Payment claims.
Last updated · Invoice Native team
Late payment hurts small businesses most. Unlike the UK, Australia has no general late payment law for business invoices: no statutory deadline, and no interest that starts running automatically. What you can charge comes from what your client agreed, and the best protection is a clear invoice sent on time.
This guide covers payment terms, how to agree late interest so it holds up, the rules that protect small businesses, government payment times, and Security of Payment claims in construction. The free invoice generator puts a clear due date on every invoice.
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No statutory interest, so agree terms up front
With no statutory rate, interest on a late invoice is due only if:
- your contract provides for it; or
- a court awards it when it gives judgment on the debt.
If you want to charge interest, agree it before the work starts, in your quote, contract or standard terms. A rate printed for the first time on the invoice is weaker, because your client never accepted it. Then put the due date and the agreed rate on every invoice, so it's clear when the payment became late.
Invoice Native doesn't add a late-interest clause for Australia. If you've agreed one, type it in the invoice notes, for example:
Interest of 8% p.a. may be charged on overdue amounts, as set out in our terms of trade.
Keep the rate reasonable
Australian courts won't enforce a term that works as a penalty: a charge out of proportion to the interest you're protecting. Set a rate that reflects your real costs of being paid late, not one designed to punish. Whether a particular rate is enforceable is a legal question, so ask a lawyer before relying on a large one.
Unfair contract terms
If you use standard-form terms with other small businesses, the unfair contract terms laws apply. Since 9 November 2023, proposing or relying on an unfair term in a standard-form contract with a small business, one with fewer than 100 employees or turnover under $10 million, is prohibited and can attract large penalties. Heavy late fees buried in your standard terms are a risk. Keep them simple and fair.
Big businesses and government
Payment Times Reporting. Businesses with revenue of $100 million or more must report how quickly they pay small businesses. There's a public list of fast payers that pay within 20 days, and the slowest may have to publish that they're slow. It's transparency only: it doesn't set a deadline or add interest to your invoice.
The Commonwealth as your client. Non-corporate Commonwealth entities must pay invoices:
| When | Maximum payment time |
|---|---|
| Now | 20 calendar days, or 5 days for a Peppol eInvoice |
| From 1 January 2027 | 10 business days for all invoices |
If they pay late, they pay simple interest at the ATO's general interest charge rate when it comes to more than $100. States have their own policies, such as Queensland's 20-day on-time payment policy.
Security of Payment claims in construction
Each state has a Security of Payment Act that gives contractors in building and construction a fast way to claim progress payments. An invoice can be a payment claim, but the wording rules differ by state:
| State | Must the claim say it's made under the Act? |
|---|---|
| New South Wales | Yes, under section 13. It must also identify the work and the amount claimed. |
| Queensland | No. The claim must identify the work and the amount, and request payment. |
| Victoria | The rules changed on 15 April 2026. Check the current requirements before you rely on them. |
Other states and territories have their own Acts. Invoice Native doesn't add these statements automatically; type the wording your state requires in the invoice notes, and get advice if a large claim depends on it.
Victoria's penalty interest rate
Victoria's penalty interest rate has been 10% a year since 1 February 2017. It applies to judgment debts and some statutory debts, not to invoices by default. Some businesses quote it in their terms as a reference rate, but it applies to an invoice only if your client agreed to it.
Practical ways to get paid faster
- Send the invoice the day the work is done, with a clear due date.
- Use short terms for small clients, such as 7 or 14 days. Be careful with "30 days EOM": an invoice dated 1 October isn't due until 30 November.
- Make paying easy: BSB and account number, and a PayID, with the invoice number as the payment reference.
- Follow up politely on the due date, then again a week later.
See invoicing as a sole trader for terms and payment details.
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Checklist
- ✅ Payment terms and any interest agreed before the work starts
- ✅ A due date on every invoice
- ✅ A reasonable interest rate, not a penalty
- ✅ Fair standard terms when you deal with small businesses
- ✅ Security of Payment wording checked for your state
- ✅ Easy payment: BSB, account number and PayID
This isn't legal advice. For a large or disputed debt, talk to a lawyer or accountant.
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Frequently asked questions
Is there a statutory late payment interest rate in Australia?
No. Australia has no general law that adds interest to a late business invoice, and no legal deadline for paying one. Interest is due only if your contract says so, or a court awards it when it gives judgment.
Can I charge interest on overdue invoices?
You can if your client agreed to it, ideally in your quote or terms before the work starts. The rate should reflect your real costs of being paid late; a term that's really a penalty may not be enforceable.
How fast do Commonwealth government agencies pay?
Non-corporate Commonwealth entities must pay within 20 calendar days, or 5 days for a Peppol eInvoice, or pay interest. From 1 January 2027, the maximum is 10 business days for all invoices.
Do I need special wording on a construction invoice?
If you want an invoice to be a payment claim under your state's Security of Payment Act, it may need to say so. In New South Wales it must state that it's made under the Act. Check your own state's rules.
What is the 10% penalty interest rate in Victoria?
It's the rate set under Victoria's Penalty Interest Rates Act, which applies to judgment debts and some statutory debts. It doesn't apply to an invoice automatically.
Sources
This guide is general information, not tax or legal advice. ATO and ASIC rules change and depend on your situation, so check ato.gov.au or ask a registered tax agent.