What Happens If a Customer Doesn't Pay Your Invoice in NZ?
Nothing happens automatically — an unpaid invoice stays unpaid until you escalate it. In New Zealand the path runs through five rungs: a clear reminder, a formal letter of demand, then (for company debtors) a statutory demand, and finally the Disputes Tribunal, the District Court, or a debt collection agency. Each rung costs more and does more damage to the relationship, so the order matters.
The Escalation Path, Step by Step
Send a clear, specific reminder
Most unpaid invoices are an administrative failure, not a refusal — a missing purchase order number, an invoice sent to the wrong address, an approver on leave. Confirm the invoice was received, state the amount and the due date, and ask for a specific payment date rather than “payment as soon as possible.” What to do when a customer pays an invoice late covers this conversation in detail.
Issue a formal letter of demand
A written demand that identifies the invoice, the amount, the due date and a deadline for payment, and says what you will do next. If your terms of trade allow it, this is where interest and recovery costs get added — see whether you can charge interest on an overdue invoice in NZ. A letter of demand is often the rung that works, because it signals the matter has left the accounts inbox.
Serve a statutory demand (companies only)
If the debtor is a company and the debt is at least $1,000, due, and not genuinely disputed, you can serve a statutory demand under section 289 of the Companies Act 1993. It gives the company 15 working days to pay, compromise the debt, or secure it. Ignore it and you can apply to the High Court to appoint a liquidator — which is why it carries weight. It is not available against a sole trader or partnership, and using it on a genuinely disputed debt can be set aside and cost you.
File in the Disputes Tribunal or District Court
Since 24 January 2026 the Disputes Tribunal has handled claims up to $60,000, doubled from the previous $30,000 limit by the Disputes Tribunal Amendment Act 2025. That now covers a large share of ordinary trade invoices. It is deliberately informal: a referee rather than a judge, and lawyers cannot appear for either side. Filing fees are tiered — in the low hundreds for most trade-sized claims. Above $60,000, it is the District Court, with the cost and formality that implies.
Hand it to a debt collection agency
Agencies typically work on commission, often 15–25% of what they recover, and can report the default to credit bureaux, which affects the debtor's ability to get credit elsewhere. It is quick to start and requires nothing from you, but you give up a meaningful share of the invoice and almost certainly the customer.
This is a general outline of the options, not legal advice. Which rung is appropriate — and whether a debt is “genuinely disputed” — depends on the facts, and getting step 3 wrong in particular can be expensive. Take advice before serving a statutory demand.
A Worked NZ Example
A plastics manufacturer invoices a GST-registered customer $14,500 on Net 30 terms. Thirty days pass with no payment and no response to two emails.
- Day 31: phone call and a reminder email confirming the invoice was received and asking for a payment date.
- Day 45: letter of demand, with 1.5% per month interest applied as provided for in the signed terms of trade.
- Day 60: the customer is a limited company, the debt is undisputed, so a statutory demand is served giving 15 working days.
- Day 80: still unpaid. At $14,500 the claim sits comfortably inside the Disputes Tribunal's $60,000 limit, so it is filed there rather than in the District Court.
Note how long that takes even when the supplier does everything promptly: nearly three months, and the money is still not in the bank. That timeline, not the legal mechanics, is the real cost of an unpaid invoice.
How to Prevent This Next Time
Every rung above is damage control. The things that actually reduce how often you climb it are all upstream of the invoice:
- Credit-check new accounts before extending terms, and set a credit limit that reflects what you can afford to lose.
- Get terms of trade signed at account-opening, including the interest and recovery-costs clauses, so the later rungs are actually available to you.
- Invoice immediately and correctly, with the purchase order reference and full taxable supply information — see do you still need a tax invoice in NZ?. A disputed or incomplete invoice is the most common reason a debt becomes arguable.
- Stop carrying the receivable. The structural fix is to not be the one waiting. Where payment timing is the obstacle, offering an instalment option at the point you invoice means you are paid upfront and the customer's schedule becomes someone else's job to collect.
For the wider picture on what late and unpaid invoices do to a supplier, see how late invoices affect supplier cash flow, and the invoicing guide for the rest of this cluster.
Frequently Asked Questions
How long do I have to chase an unpaid invoice in New Zealand?
Contract debts in NZ are generally subject to a six-year limitation period, so you have time — but recovery rates fall sharply the longer a debt ages, and a debtor company can be wound up or struck off in the meantime. Acting within the first couple of months matters far more than the legal deadline.
What is the Disputes Tribunal limit for an unpaid invoice?
$60,000, since 24 January 2026, up from $30,000. Business-to-business claims including unpaid invoices can be heard there, lawyers cannot appear, and filing fees are tiered by claim size.
Can I send a statutory demand for an unpaid invoice?
Only if the debtor is a company, the debt is at least $1,000 and due, and there is no genuine dispute about it. It gives 15 working days to pay before you can apply to liquidate the company. It is not available against sole traders or partnerships.
Should I use a debt collection agency?
It is fast and costs you nothing upfront, but commission is typically 15–25% of what is recovered and the commercial relationship is usually finished. Most suppliers try a letter of demand first, since that often resolves it at no cost.
Can I stop supplying a customer who hasn't paid?
Generally yes, and putting an account on credit hold is standard practice — but check your terms of trade and any supply agreement first, particularly where you have committed to a volume or a delivery schedule.
The Structural Fix Is Not Being the One Waiting
PaidTerms pays you the full invoice upfront and manages your customer's repayment schedule, so an unpaid invoice never becomes your collection problem.
Read next: can you charge interest on an overdue invoice?, or how late invoices affect supplier cash flow.
