Send a Strong Message to Your Debtor Using a Letter of Demand

Send a Strong Message to Your Debtor Using a Letter of Demand

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Hi, my name is Adam Stewart, Debt Collection Expert and owner of Debt Recoveries Australia.

I get many clients asking me how they should collect their debts and what sort of letter they should send, if at all. I think it is the credit manager’s personal decision if they outsource to a professional debt collection expert, or they attempt the recovery themselves. If you want to do it yourself, here are some insider’s tips to help you along the way.

Friendly and Persistent

The secret in your debt collection communications is to be friendly, yet persistent. I believe persistent follow up will often guarantee payment, along with friendly-worded letters or emails.

Sometimes a correctly worded and efficient letter of demand is enough to get you payment in full. A Letter of Demand is the document needed to make a formal demand that somebody who owes you money should pay you and avoid court action.

Sending a letter of demand can save you heaps of money in court fees and solicitor’s fees. It is easy and you do not need a licence to do it yourself.

See also: How to collect debt fast and improve your accounts receivable

What is a Letter of Demand?

A Letter of Demand is a formal request to be paid an outstanding debt.

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    What are the advantages of sending a Letter of Demand?

    Sending a letter of demand can save you heaps of money in court fees and solicitors fees. It is easy and you do not need a licence to do it yourself. Sending the letter of demand will give the debtor one more chance to come to some sort of arrangement with you, before you hand it over to a debt collection agency or litigation firm. The letter will also send them a clear indication that you intend to escalate the matter and that you are serious about payment.

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    How to Write the Letter of Demand

    First, check your contract or agreement with the person who owes you money to ensure you are making the demand for the correct amount. Remember to add on any penalty or interest, as per your terms.

    Second, I always recommend to my clients that they attach all relevant documents to the letter, such as copies of invoices, contract, terms etc. These are all evidences of your claim and serves as back up your demand. It will head off any questions they may have about how you came up with your figure.

    Third, avoid misleading the debtor into thinking that you are a legal entity. You can gently remind them of the repercussions of non-payment, i.e., court proceedings, credit rating being affected etc.

    A Letter of Demand must include:
    • Amount of the debt
    • Date the debt was due
    • Date of the Letter of Demand
    • Description of the debt (such as what the money is owed for), and
    • Any relevant evidence such as contracts, invoices, emails agreeing to work or other written agreements that you have with the person/company you are claiming the money from.
    • A deadline for payment- don’t forget your ABC’s- Always Be Closing!!!! Don’t forget to close the deal and ask for the money and tell them when you want it paid by, preferably 7 days.

    How to send a Letter of Demand

    I am a big fan of the Internet, not of snail mail. If you have to send your letter of demand by snail mail, then send it by registered post or by courier to ensure you have proof that it was delivered. Then allow a reasonable time for the person who owes you money to comply with or respond to the letter. I prefer email or SMS. This is quick and instantaneous. Do not be afraid to contact your debtor by social media as well, so LinkedIn and Facebook are also great ways of getting in contact with your debtor to advise them of your letter of demand that is on its way.

    How should I word the Letter of Demand?

    As I have said before, deadlines are important. 7 days is a reasonable time for a debtor to at reply with an offer to pay. So it is very important to date your Letter of Demand so the debtor knows exactly when it was sent and the deadline to contact you and pay. Writing a Letter of Demand should be straightforward and clear. Do not make any allegations or arguments in the letter. Simply state the debt, when it was incurred, what it was for, confirm it still has not been paid and any penalties that are have accrued.

    As I mentioned previously, you can remind your debtor of the possible repercussions of non-payment, which are that non-payment may result in the matter being escalated to a debt collection agent for further action, including legal action. This can lead to the loss of a good credit rating. Extra fees may apply, including the debt collection agent’s fee and/or legal fees.

    Mention in your letter that the next step may be that the matter is going to be handed to a debt collection agent (Debt Recoveries Australia) or your legal team for litigation (ADC Legal Litigation Lawyers).

    Do not forget, any proof of debt such as invoices, emails, letters or other documents relating to the dealt should be copied and attached to the Letter of Demand.

    You can use a Letter of Demand when you owed money by either an individual or a company and they have not responded to your invoices or other requests for payment. It is a great way to send a strong message to your debtor that you are serious about payment. If you do not get a reply to your letter, you know what to do. Ring your Debt Collection Expert and we will help you out.

    Would you like to have a FREE copy of a Letter of Demand? Send me an email at Debt Recoveries Australia at

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    Call Us: +61 1300 799 511

    Adam Stewart - Debt Collection Expert
    About the Author

    In 2002, Adam Stewart established Debt Recoveries Australia Pty Ltd, a debt collection agency specialising in the insurance claims industry.

    Adam has worked in the fields of motor vehicle insurance and debt recovery for over 12 years, working with some of the largest insurance and debt recovery companies in Australia. Read more

    15 Comments on “Send a Strong Message to Your Debtor Using a Letter of Demand

      • Thanks for your interest. I have sent you an email. Hope it helps. Cheers, Adam.

    1. I love the way this is write an the information is very good an helpful. I am in charge of Accounts Receivable at a university and we are always trying to reduce costs and be innovative.
      I like the suggestion of the friendly Letter of Demand. We deal mainly with students and do not want to come down too hard in every situation. We are sending a Letter of Demand now, with good results, however, I would be interested in looking at your Letter of Demand example.
      Thank you for this information.

    2. If the person you sent the demand letter to pays off the full amount disclosed in the demand letter on or before the deadline stated in such letter, can a lawsuit still be filed for any other “damages” or amounts that may have been due or is the payment considered final and that closes the account and no further action can be taken?

    3. Thank you very much. Please send me a copy of the Letter of demand.

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