Yes, if the debtor is a company, it owes you at least $4,000, the debt is due and payable, and there is no genuine dispute about it. A creditor's statutory demand (Form 509H, under section 459E of the Corporations Act 2001) gives the company 21 days after service to pay, settle or apply to court to have it set aside. If it does none of those, it is presumed insolvent and you can apply to have it wound up. It does not work against sole traders or partnerships, and using it on a disputed debt can leave you paying costs. Get legal advice before you serve one.
General information only, not legal or financial advice. Every business and every debt is different. For advice on your situation, talk to a lawyer, your accountant or your state small business commissioner.
Step by step
- 1
Confirm the debtor is a company
Look up the ABN on ABN Lookup and the ACN on the ASIC register. A statutory demand only works against a company. If your customer is a sole trader or partnership, the route is a court judgment first, then possibly a bankruptcy notice through AFSA.
- 2
Check the debt is at least $4,000 and due
The debt or debts must be due and payable and total at least $4,000. You can combine several overdue invoices from the same company to reach that figure.
- 3
Check there is no genuine dispute
Read back through emails and call notes. If the customer has raised a real complaint about the work, the price or the amount, or says you owe them money, a demand is the wrong tool. Use a tribunal or court claim instead.
- 4
Prepare Form 509H and the affidavit
The demand must be in the prescribed form (Form 509H) and signed by or for you. Unless the debt is a court judgment, it must come with an affidavit verifying the debt is due and payable (Corporations Form 7). The affidavit must not be dated before the demand.
- 5
Serve it at the registered office
Leave it at, or post it to, the company's registered office as shown on the ASIC register, or hand it personally to a director who lives in Australia. A posted document is presumed served on the seventh working day after posting.
- 6
Diary the 21 days
The company has 21 days from service, not from the date on the document. If it applies to set the demand aside, the court extends the time while it decides.
- 7
Decide whether to apply to wind up
If the company does not comply, you can rely on the presumption of insolvency in a winding up application filed within three months. That is a formal court process with filing fees, ASIC notices and a registered liquidator's consent, so get a lawyer.
What else to know
What a statutory demand actually is
A creditor's statutory demand is a formal written demand, in a form set by the Corporations Regulations, that requires a company to pay a debt within 21 days of being served. It is not a court claim and no judge looks at it before you send it. Its force comes from what happens if the company ignores it: under the Corporations Act the company is presumed to be insolvent, and the creditor can use that presumption to ask a court to wind the company up. Form 509H itself warns the company that failing to respond may result in it being placed in liquidation and control passing to a liquidator.
Why it gets attention
Most directors take a statutory demand seriously because the downside is losing the company. That is why a demand often produces payment, or at least a phone call, when months of reminders did not. The 21 day deadline is also strict for the debtor. The Federal Court notes that an application to set aside a demand must be filed and served within the 21 days, and the courts have no power to extend that time.
When not to use one
A statutory demand is designed for debts that are clearly owed. The court can set aside a demand if there is a genuine dispute about the debt, if the company has an offsetting claim against you, if a defect in the demand would cause substantial injustice, or for some other reason. It must set the demand aside if the undisputed amount, after any offsetting claim, is less than $4,000. If your customer has already said the work was defective, the invoice was wrong or you owe them a credit, expect an application to set it aside, and the possibility of a costs order against you. In that situation a claim in your state's small claims court or tribunal is usually the better path, because the court will decide the dispute rather than just the pressure point.
Get the details exactly right
Small errors cause big problems. Use the company's exact legal name and ACN from the ASIC register, not its trading name. Describe each invoice clearly in the schedule, with dates and amounts. Only include amounts that are actually due and payable now. If you add interest, it should be interest your contract clearly entitles you to (see our guide on charging interest). Keep proof of how and when you served the demand, because if you later apply to wind up, you will need to prove service by affidavit.
Winding up is a blunt instrument
If it comes to winding up, a liquidator takes control of the company and deals with all of its creditors, not just you. Recovery in a liquidation is often partial or nil, and you will usually have spent money on legal costs getting there. So treat the demand as serious leverage, not a free bluff. Only serve one if you are prepared to follow through or genuinely accept the outcome, and think about whether a payment plan in writing would get you more of your money. If the company is already in liquidation or administration, stop and read our guide on clients going into liquidation instead.
Statutory demand or small claims?
A small claims application gets you a judgment that a court can enforce, with options such as garnishee orders. It suits disputed debts and debts under $4,000. A statutory demand is faster pressure on a company for an undisputed debt, but it does not give you a judgment. Some creditors get a judgment first and then serve a demand based on that judgment debt, which leaves less room for argument about whether the money is owed. A lawyer can help you choose.
If your customer is an individual or sole trader
A statutory demand cannot be used against a person. The comparable step is a bankruptcy notice, issued by AFSA, which requires a final judgment or order for $10,000 or more that is no more than six years old. The person then has 21 days from service to comply. Bankruptcy has serious consequences for the debtor, so it is generally a last resort and legal advice is wise.
Final notice template (send before any formal step)
Common questions
What is the minimum debt for a statutory demand?
$4,000. The statutory minimum is set by the Corporations Regulations, and the demand can cover one debt or several debts from the same company that together total at least $4,000.
How long does a company have to respond to a statutory demand?
21 days from the date it is served, not the date printed on the demand. A posted demand is presumed served on the seventh working day after posting.
Can I serve a statutory demand without a lawyer?
The creditor can sign the demand, but the Federal Court says serving a demand has serious consequences and recommends getting legal advice first. Mistakes in the form, the affidavit or service can see a demand set aside.
Can I use a statutory demand if the customer disputes the invoice?
Generally no. A genuine dispute or offsetting claim is a ground for the court to set the demand aside, and you may be ordered to pay costs. Take a disputed debt to your state small claims court or tribunal instead.
Can I send a statutory demand to a sole trader?
No. Statutory demands only apply to companies. For an individual you would usually need a court judgment, and for $10,000 or more you could then consider a bankruptcy notice through AFSA.
What happens if the company ignores the demand?
It is presumed insolvent and you can apply to court to wind it up within three months. That is a formal process with fees and legal costs, and in a liquidation you may recover only part of the debt.
Official sources
- Federal Court: winding up based on an unsatisfied statutory demand (Information Sheet 1)
- Corporations Act 2001 (Cth), sections 459E to 459J and 109X
- ASIC: company and organisation registers (free search)
- ASIC: serving documents and company addresses
- AFSA: bankruptcy notice (individuals, $10,000 or more)
- ASIC: insolvency information for creditors
Sources checked 22 October 2026. Rules and limits change, so check the official site before acting.
Related guides and tools
- How do I recover an unpaid invoice through small claims in NSW?
- What should I do if a client who owes me money goes into liquidation?
- What goes in a letter of demand in Australia?
- Late payment interest calculator
- Late payment cost calculator
- Free overdue invoice templates
- The 7 step overdue invoice playbook