Look, if someone owes you money and won’t pay up, a letter of demand is your first proper move. Chasing debts is nobody’s idea of a good time. It’s frustrating, it eats up your day, and honestly, it can drive you mad. But here’s the thing: this one document gives people their last shot at doing the right thing before you bring out the big guns.

So what exactly is it? It’s basically your formal way of saying “pay me what you owe.” It reminds them what they owe, why they owe it, and what happens if they keep ignoring you. You’d send this after your invoices have been ignored and your friendly reminders have gone into the void. In this article, we’re going to show you how to write one that actually works. We’ll cover what needs to be in there and how to make sure it doesn’t just get tossed in the bin.

What is a letter of demand and why it matters

A letter of demand is essentially your formal written request for payment. It’s the official notice that says “here’s what you owe, here’s what it’s for, and here’s when I need it paid.” The document spells out your legal claim and your rights whilst asking for your money back, a refund, or whatever was promised in your agreement.

Definition and legal purpose

These letters do two jobs at once. They’re legal documents and they’re a way to communicate that you mean business. Here’s the important bit: only use them for debts related to actual goods or services you’ve provided. Don’t use them for money owed from accidents or damages. That’s a different kettle of fish entirely.

The document creates a paper trail showing you’ve genuinely tried to sort this out like a reasonable person. Professional debt collection Brisbane services will tell you this step matters because it puts everything in black and white. It spells out what happens if they don’t pay within your timeframe, which usually means you’ll take legal action.

When to use a letter of demand

Timing is everything here. Don’t jump the gun, but don’t wait around forever either. Send one when:

• The payment is seriously overdue and you’ve already sent reminders that went nowhere
• You’ve tried the friendly approach multiple times and it hasn’t worked
• You need to show you’re not mucking around, but you’re not quite ready to lawyer up yet
• The debt’s still sitting there unpaid and court’s starting to look like the only option left

Send it too early and you might damage a business relationship that could’ve been salvaged. Wait too long and you’ve lost momentum. Plus people start thinking you’re not serious about collecting.

Benefits of sending one before legal action

Here’s why these letters are worth doing: they work. Simple as that. They give the debtor one more chance to sort things out, and they show you’re willing to avoid court if possible. This can actually save a business relationship if there’s one worth saving.

If things do end up in court, your letter becomes golden evidence. It proves you tried to be reasonable and settle things fairly first. And compared to the nightmare of litigation (the costs, the time, the headaches), these letters are the express lane.

Most people will respond once they see you’re serious. Some genuinely forgot (it happens), whilst others suddenly become very interested in negotiating once they’ve got a formal demand in their hands.

How to write a letter of demand that works

Right, let’s get into the nuts and bolts of actually writing this thing. A good letter of demand needs to be detailed and properly formatted. It’s not the time for sloppy work.

Start with clear identification of parties

Put everyone’s full details in the letter. That means full legal names and current addresses for both you and them. No nicknames, no abbreviations. Do it properly. This sets the professional tone and makes sure there’s zero confusion about who’s involved.

If it’s a business you’re dealing with, do your homework and find out who actually legally owns it. That might not be the person you shook hands with or signed the contract with, which can matter down the track.

State the amount owed and why

Don’t beat around the bush. State exactly what’s owed. Break down the figures if you need to so it’s completely clear. Put in the key dates: when payment was supposed to happen, when things went pear-shaped, all of it.

Give them a quick rundown of what you agreed to and point to the specific terms. Spell out what goods or services you actually provided. Be specific. And here’s a trap: only add GST or interest if your contract explicitly says you can. Don’t just chuck it in there and hope for the best.

Include relevant documents and evidence

You need backup for what you’re claiming. Contracts, invoices, receipts, photos, emails, text messages. Whatever proves your case. List everything you’re attaching and refer to the relevant bits in your letter. This isn’t optional. These documents make the difference between “I reckon you owe me” and “here’s the proof you owe me.”

Set a firm deadline for payment

Give them a deadline that’s clear as day and actually reasonable. Usually 7-14 days from when they receive it works well. But here’s the key: use an exact date and time. Write “5:00 pm on 28 October 2023” instead of wishy-washy language like “within 14 days” or “in two weeks.”

This does two things: it creates urgency, and it doesn’t give them wiggle room to claim they misunderstood when the deadline was.

Mention consequences of non-payment

Tell them straight up what happens if they don’t pay. Maybe you’ll start legal proceedings, maybe you’ll engage a debt collector, maybe there are other remedies in your contract you can pursue. Whatever it is, spell it out.

But (and this is crucial) only threaten what you’ll actually do. Empty threats will blow up in your face and destroy your credibility. If you say you’ll take them to court and then don’t, you’ve just shown them you’re not serious.

Best practices for sending your letter

Writing the letter well is only half the battle. How you send it matters just as much, if not more.

Choose the right delivery method

You want to make absolutely sure this letter gets to them and you can prove it got there. Best approach? Use multiple methods at once.

Email is quick and easy, but physical mail carries more weight legally. If you can hand-deliver it yourself or have someone do it for you, that’s even better because you know for certain they got it. Registered post or a courier with tracking are also good options.

Whatever you do, get proof of delivery. If this ends up in court, “I sent it” won’t cut it. You need “here’s the proof they received it on this date.”

Keep a copy and proof of delivery

Before you send anything, make copies of everything. The letter, the attachments, the lot. Then keep every scrap of proof that shows delivery. Postal receipts, courier tracking printouts, email delivery confirmations, read receipts, everything.

If you end up in court, these records prove the debtor got your demand and chose to ignore it. It shows you did everything right and tried to sort it out first. Don’t skip this step.

Follow any contract-specific notice requirements

Here’s something people often miss: check your actual contract or agreement before you send the letter. Some agreements have specific rules about how notices have to be delivered. Maybe it has to go to a particular address, or be sent a certain way, or include specific information.

The National Credit Code has its own requirements too. It requires specific notices and waiting periods before you can take further action. If you don’t follow these rules exactly, the debtor can turn around and say you didn’t notify them properly. Don’t give them that out.

What to expect after sending the letter

Alright, you’ve sent the letter. Now comes the waiting game, and how they respond determines what you do next.

Possible responses from the debtor

People generally respond in one of five ways:

• They pay in full: Best case scenario. They cop it and pay everything
• They want to negotiate: They come back asking to pay in instalments or offering partial payment
• They counter-offer: They dispute parts of what you’re claiming but might accept other bits
• They flat-out reject it: They deny owing you anything at all
• Radio silence: They ignore you completely

If you get nothing back, it might be worth sending one more final demand. Sometimes the first letter genuinely gets lost or they need that extra push. Often this follow-up will sort things without needing to go to court.

How to handle disputes or negotiations

If they come back disputing things or wanting to negotiate, respond quickly. Explain what parts you’ll accept and what you won’t budge on. Back everything up with your documentation. Don’t just rely on your word against theirs.

Important tip: when you’re negotiating a settlement, mark all your communications “Without Prejudice.” This legal term means nothing said during genuine settlement talks can be used against you in court later. It gives both sides room to negotiate honestly.

They might offer to pay in instalments or settle for less than the full amount. Whether you accept depends on your situation. Getting 70% now might be better than chasing 100% for the next year. Use your judgement.

Keep things professional even if they’re being difficult. You’d be surprised how many disputes get resolved through simple phone calls or emails once people actually talk to each other.

When to escalate to legal action

If your final notice gets ignored completely, court might be your only option left. For debts under $150,000, you can use local court. Small claims (under $15,000) usually gets resolved within six months and is less formal.

You start proceedings by filing a Statement of Claim. They’ve then got 28 days to respond. If they don’t respond in time, you can apply for a default judgement. Basically the court rules in your favour automatically because they couldn’t be bothered responding.

But treat legal action as the absolute last resort. Courts want to see that you genuinely tried to sort things out first. Your demand letter and any follow-up you’ve done proves you made reasonable attempts before taking them to court.

Conclusion

A well-written demand letter is hands-down your best tool for getting paid before things escalate into expensive legal battles. It works when you keep things clear and professional. No need to be aggressive or make threats you won’t follow through on. Your goal is simple: get what you’re owed whilst staying in control and keeping the legal high ground.

Most people will respond positively to a formal demand letter. It’s not just paperwork for the sake of it. It’s both practical and legally necessary. The letter shows you’re serious and creates the paper trail you’ll need if court becomes unavoidable.

Don’t underestimate how important your documentation is. Keep copies of absolutely everything: the original letter, all your evidence, proof of delivery, the works. This preparation puts you in the driver’s seat whether they pay up immediately or try to fight it.

After you send it, be patient. Give them the full timeframe you specified before you do anything else. Plenty of disputes get sorted during this period, either through negotiation or payment plans that work for everyone. Legal action is always there as an option if you need it, but treat it as the nuclear option after you’ve exhausted everything else.

Recovering debts takes persistence and keeping yourself organised. A properly done demand letter shows you’ve got both those qualities sorted whilst protecting your rights and giving you the best shot at actually collecting what’s owed. Use what we’ve covered here to write a demand letter that gets results and helps you recover what’s rightfully yours.