When you make an agreement, whether it’s for an item you sold, providing a service, compensation for damages, or splitting the cost of something, you expect to be paid. Unfortunately, some people feel that it’s all right to refuse payment after the fact. Ideally, it would be best to get your money upfront, but it’s not always possible. Sometimes the other person doesn’t hold up their end. What can you do about it? What is a payment demand letter and how does it work? What should you say? Are there things you shouldn’t say? Do you have to write it yourself?
This is the perfect time for a strong demand letter for payment. By sending a demand letter, you make sure the payee knows that you still expect to be paid for services, products, or damages. It’s important not to wait too long and to phrase things correctly. In this article, you will learn everything you need to know to send an appropriate but strong demand letter, so you get paid.
What is a Payment Demand Letter?
Payment demand letters are exactly what they sound like. These letters tell someone that you are demanding they pay you a specific amount for a specific reason. Specifically, a payment demand letter serves three purposes:
- It is a statement reminding someone that you feel they owe you money and you intend to collect.
- It is the beginning of a paper trail proving you took the correct steps to attempt a remedy in case you end up in court.
- A payment demand letter is the beginning of a negotiation process between two individuals or entities where a financial debt is owed.
What Is a Strong Demand Letter for Payment?
A strong demand letter for payment uses polite but firm language to express that you, the sender, feel you are owed money. The debt can be from a job or other contract, sale, verbal agreement, damage to your property, or any other reasonable situation in which financial compensation is due. The strong demand letter for payment indicates that you insist on proper repayment and are willing to pursue it further if necessary. However, a strong demand letter for payment on its own is often enough to settle the matter since most people don’t want to end up in mediation or court over money, especially when they are the ones who owe. Paying on a demand letter is typically less expensive than drawing the situation out.
How to Write a Strong Demand Letter for Payment?
Writing your strong demand letter for payment is easier than you think when you have the correct information. You can start a draft on paper, but it’s always better to type out the final copy. Follow the steps below to create your letter.
- Make sure you are owed the sum you are requesting. It is important to avoid asking for more or creating exaggerated claims. If necessary, collect paperwork together, such as the bill for a car repair when someone else hit you or the cost of removing your neighbor’s fallen tree from your property and what you paid to fix the fence. Don’t leave anything out or add any extra.
- Add a date at the top and a formal introduction.
- State clearly what you are writing about.
- Establish the facts of the situation. It helps to assume this will someday be evidence in court where the lawyers and judge never saw what happened or was agreed upon in the first place. This is important even if you never intend to go to court. By establishing your facts and timeline here, it’s easy to see why you feel you are owed money.
- Refer to any evidence, though you don’t need to include copies here. If you have a written contract, mention it. If the agreement was verbal, say so. Likewise, if you feel you are owed for damages or some other issue, mention any actual evidence you have, like receipts for what you paid or bills from a doctor.
- State your demand amounts. This is where you itemize exactly how much you feel you are owed and why. For example, include the fees if your neighbor’s tree fell on your property and you paid someone to chop it up and haul it away. Then add the cost for fence repairs. If you also had to re-seed your lawn because of damages, then add the cost of that seed and reasonable amounts of water to reestablish that patch of lawn. Don’t try to add emotional damages or interest payments o anything like that—state what is owed.
- If there’s any question of why you feel this particular person owes you the money, include a brief statement of why you feel they are the one who should pay for it. For example, if the neighbors next door had a tree fall on your property, but it’s a whole, multigenerational family, tye aren’t all liable. The person who planted the tree or the one who does the yard maintenance might be at fault, but not the other family members. Alternately, if someone hit the tree or otherwise abused the tree to fall, then they would be the one who should pay for the damages.
- Create a deadline and establish the method of payment. When it is a relatively small sum, you could expect repayment in a lump sum within a reasonable period, like 30 days. However, if the amount you feel you are owed is larger, then it’s best to demand installment payments on a set schedule.
- Specify the repayment method. Don’t leave this open to debate. Be clear and reasonable about the method of repayments, such as bank checks or cash, and the delivery method like ‘in person’ or ‘via certified mail.’
- Close with a consequence such as seeking mediation or the intent to file a civil suit. These are the only two options available, so don’t threaten anything else.
- Add a formal closing signature such as ‘sincerely’ and your name.
Sample Strong Demand Letter for Payment
A strong demand letter for payment is short and to the point. It includes only the necessary information about why money is owed and who the parties involved are. Below you’ll find a simple format that you can copy easily for your own use.
To: Recipient Name and Address
From: Sender Name and Address
Regarding: Notice of Demand for Payment
As of the above date, you still owe $_____.__ for _________ and the payent is past due.
(optional evidence citation) We had agreed on a payment/payments of $_____.__ or The costs I incurred on your behalf for _____ and _____ were $_____.__ and $ _____.__.
The payment is due by (date) __/__/20__. Please submit this payment via (cash, check, bank check, etc.) to (address) by that time. If you have any questions, you can contact me by (letter, email, calling, etc.) at ______. If you do not make payment within the given time frame, I/we will pursue further legal action.
Sincerely (or Best Wishes),
Your name typed
Your signature is in blue or black ink.
Sample Demand Letter for Payment (From an Attorney)
Attorneys wishing to send a letter requiring payment can use the simple format provided below. Many law offices have their own forms, so your letter may not look like this if your lawyer has another format, but it will contain all the same information.
Legal Firm or Attorney Name
Name of Recipient
Re: Final Demand Letter Before Legal Action
On behalf of my/our client (name), I/we at (practice name) am/are writing to inform you that your payment of $_____.__ is in arrears as of (date) __/__/____. Per the agreement (or other reason such as damages) you made on (date) __/__/____, these monies are now due.
(Optional) Note interest accrued here. Therefore you will be charged (New Amount) $_____.__ which is a reasonable rate for the inconvenience of late payment.
This letter serves as the final warning for your past due payment. If payment is not made within (Number of) days, we will have no choice but to take immediate legal action. Please contact our/my firm at (Phone Number) (___) ___-____ if you have any questions or wish to arrange for payment.
(Sincerely or Yours Truly),
Pointers for Presenting Your Demand Letter
It’s important to get organized before you type the first word or send anything. Collect any information you need together, like their address, any relevant bills for expenses related to the repayment, etc. Once you know what you need to ask for, follow the points below to create a clear, concise demand letter.
- Always use polite but firm language.
- Stick to the point. Don’t add any unnecessary details, opinions, guilt trips, or other thoughts in this letter.
- Don’t give anything away for free. Whether you anticipate having to go to court or not, you should avoid including references to additional evidence unless it relates directly to how much money is owed and why. Only refer to bills, receipts, damages, and other factual information, not pictures, witnesses, or useful data.
- Never threaten or extort the person. You can only demand repayment or take further legal steps to have a mediator or civil suit. You cannot charge them with crimes (only the government can do that) or threaten them with retaliation or harm.
- Include the facts, so it is clear why you feel you are owed. This is where you tell your side of the story but keep the emotions and opinions out.
- Ensure that you clearly state the issue and how you expect it to be resolved.
- Set the terms for repayment and always include a deadline. Please don’t leave it up in the air, but be reasonable and offer a suitable timeframe for repayment. The larger the sum, the longer that timeframe needs to be.
- Do not write by hand. Always type your demand letters, so they are easy to read.
- Sign at the bottom below your typed name.
- Make copies for yourself and potentially a lawyer later.
- Please read the letter over, or have someone else read it after you’ve finished, and remove any excess information that doesn’t relate directly to the money, reason, or due date and format for collecting.
- Always send a demand letter via certified mail. You want a signature showing the letter arrived and was received by the person to whom it was addressed.
When to Consult with An Attorney
First, it is important to understand that you always have the right to consult an attorney. Whether you have a legal question or need help sending a strongly worded demand letter for payment, you do not have to wait any specific time before talking to a professional. You may have to pay for their time or inquire online with attorneys who provide free opinions on your questions, such as you might find on AVVO or other ask-a-lawyer sites. They will likely recommend that you send a strong demand for repayment letter as a first step in the repayment process.
Hiring a lawyer to look at your strongly worded letter is another smart option. However, you should definitely contact an attorney when you have already sent a strong demand letter for payment and received no response or a negative response. When you state that you will pursue the issue further, you need a lawyer to do so. That should never be an idyl threat. If the offending party refuses to pay, it is time to get an attorney and file suit or seek a mediator.
It is never an enjoyable experience when someone owes you money they haven’t yet paid. However, you have a right to collect. Sending a Strong Demand Letter for Payment is the first step in collecting overdue and unpaid monies. Remember that a court may someday see your letter, so it needs to be clear, concise, and professional with no feelings, threats, or additional confusing data. The only point of this letter is to offer the person who owes you money the chance to repay it in a reasonable time instead of taking them to mediation or small claims court. Typically these letters yield a quick response, and you will get your money without further action. However, you should always be prepared to take the next steps.