A letter of demand is a formal written demand for payment. It often works on its own, and where it does not, it becomes the foundation of your legal claim.
When to send one
After ordinary reminders have failed and before you consider legal proceedings. It marks the point where an overdue account becomes a formal dispute.
Sending one early is not aggressive. It is clear, and clarity usually gets paid faster than politeness.
What it must contain
- Your full details and the debtor’s full details
- The amount claimed, stated precisely
- What the debt is for, with invoice numbers and dates
- A clear demand for payment
- A deadline, commonly 7 to 14 days
- What you will do if payment is not made
- Your payment details
- Date and signature
Tone
Firm, factual, unemotional. A letter that reads as angry is easier to ignore and worse to produce in court. State the facts and the consequence.
How to send it
| Method | Note |
|---|---|
| Fast, gives a delivery record | |
| Registered post | Proof of dispatch to the recorded address |
| Hand delivery | Get a signature on your copy |
Send by more than one method where the amount matters. Keep proof of everything.
Prescription
Debts prescribe after a period, commonly three years for ordinary contractual debt, after which they become unenforceable. Do not leave an unpaid invoice sitting for years assuming you can act whenever you choose.
If it is ignored
Options include the Small Claims Court for smaller amounts, where legal representation is not permitted and costs are low, or instructing an attorney for larger claims.
Before either, weigh the cost of recovery against the amount and the likelihood of actually collecting from that debtor.
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General information, not legal advice. Lightbizhub is not a law firm. For complex, disputed or high-value matters, have any document reviewed by an admitted attorney before you rely on it.