Writing a letter of demand

Using a letter of demand is an important formal first step to take to recover money owed to you.

You can write a letter yourself without the aid of a lawyer to save money.

Before sending a letter of demand, check your contract or agreement with the person or company who owes you money. It is important your letter of demand is sent to the correct person or company. Make sure your demand is in line with your agreed terms and conditions.

You may also wish to consider if you need legal advice before sending a letter of demand.

Advantages of sending a letter of demand

• Provides the debtor with a clear demand for payment.
• It gives the debtor one more chance to pay before you take further action.
• It can help maintain goodwill and a positive working relationship to avoid potentially hostile and expensive legal proceedings.
• It could provide useful written evidence if you need to take the matter further (send it by registered post or courier to ensure you have proof of delivery).

What to include in a letter of demand

If you decide to write your own letter of demand, it should:

• Clearly explain the issue.
• Firmly request the other party pay within a specific time period (that is stated in the letter).
• Detail your preferred payment method.
• Supply copies of any previous requests for payment and documents that support your claim for the payment due.
• Keep a copy of the letter and any other documents sent to the other party for your own records.

Other useful tips

• Make sure you attach copies of any relevant contracts, agreements, invoices and any other evidence that you supplied the goods or services as promised. Be aware that a letter of demand can only be used for debts related to goods or services provided; it cannot be used in relation to loss or damage.
• The letter of demand should not look like a legal document, nor should it imply that you have started any legal proceedings.
• Clearly state the deadline by which you expect to be paid. As a guide, give the debtor at least 14 days to pay.
• If the debt is still outstanding at the end of this period contact us for further help.
• If you receive a letter of demand, don’t ignore it. If you disagree with the amount owed write back to the person who sent it asking for clarification. If you don’t believe you should pay any of the claim contact our business advisory service for help.

The advice and resources on this page are general in nature and do not constitute legal advice. For legal advice specific to your particular facts and circumstances, please contact a lawyer. Refer to our disclaimer for further information.