Late payments from clients or customers can be a frustrating and financially damaging experience for businesses. However, writing a powerful demand letter for payment can effectively recover the debt, encourage communication, and protect your legal rights.

Here are some essential tips to help you write a persuasive demand letter for payment.

It’s crucial to start your letter with a friendly tone, as this can help establish a positive relationship with the recipient and encourage them to take your request seriously.

According to a survey conducted by Rocket Lawyer, 79% of small business owners reported experiencing late payments, and nearly half of those reported difficulty paying their bills as a result.

Starting with a friendly tone can help alleviate tension or frustration between the parties involved.

Importance of demand letters

In addition to a friendly tone, it’s crucial to be clear and concise about the purpose of your letter from the outset. State that you are writing to demand payment for the goods or services provided, and provide specific details about the amount owed and the date by which payment is due.

According to the same Rocket Lawyer survey, 63% of small business owners reported that demand letters effectively prompt payment. Being clear and specific can increase the chances of prompt payment.

It’s also essential to provide a detailed account of the situation. In your demand letter, give a detailed account of the goods or services, including dates, quantities, and prices.

This can help to clarify any confusion or misunderstanding about what is owed and why. According to a study by Fundbox, the average small business has $84,000 in unpaid invoices, representing significant lost revenue. A detailed account of the situation can help you recover this lost revenue.

Consequences of non-payment

Be clear about the consequences of non-payment. If payment is not received within a specific timeframe, you may be forced to take legal action to recover the debt. This can include filing a lawsuit, hiring a collection agency, or reporting the debt to credit agencies.

Explain any interest or fees incurred if payment is not made promptly. According to a study by the National Federation of Independent Business, 30% of small businesses reported being unable to collect a debt, even after taking legal action.

Being clear about the consequences can increase the chances of prompt payment and prevent legal action from becoming necessary.

Encourage the recipient to communicate with you to resolve the situation. Provide contact information, such as a phone number or email address, and invite them to contact you with any questions or concerns.

Be open to negotiating a payment plan or settlement agreement if it is in your best interest. Encouraging communication can help to resolve the situation amicably and prevent legal action from becoming necessary.

Writing a powerful demand letter

In your closing, reiterate your demand for payment and the consequences of non-payment. However, it’s still essential to maintain a firm but polite tone and avoid threatening or confrontational language.

Thank the recipient for their attention to the matter, and express your hope that the situation can be resolved amicably. By closing politely but firmly, you can encourage prompt payment while maintaining a positive relationship with the recipient.

Writing a powerful demand letter for payment can effectively recover unpaid debts and protect your legal rights. Following these essential tips can increase the chances of prompt payment, encourage communication, and prevent legal action from becoming necessary.

However, it’s crucial to recognize that demand letters are not always successful, and legal action may be necessary to recover the debt.

Send a demand letter for payment

It is not uncommon for any business to hire a law firm to send a demand letter for payment. However, a demand letter can be used for many areas of law. You can have a lawyer send a demand letter to see your child or to get child support (family law.)

You can also have a lawyer send a demand letter for severance pay (employment law.) We have affordable lawyers who can send demand letters for various things. A demand letter is the cheapest way to try and resolve a legal dispute.

The law firm will write a demand letter to the person who owes you money. The payment letter will say that the person should pay the debt owed, or your business might pursue legal action.

Types Of Demand Letters

Of course, many businesses don’t plan to pursue legal action. However, most people want to avoid an expensive breach-of-contract battle in the courts.

You can book a time to speak to a business lawyer who can work with you. They can service anyone anywhere in Canada.

You can also call us at the number below and explain your situation. We have also included a sample of the demand letter towards the end of this article.

Demand Letter For Overdue Payment

A lawyer writes a demand letter to demand that someone stop doing something or do something they are required to do. For example, a law firm might write, “Our client has hired us to demand that you stop using the company trademark illegally.

Please confirm you will stop using the trademark within ten business days. If we do not hear back within that time, we may pursue legal action against you.”

The demand letter is two pages long. If it’s simple, it might be only one page. If you want to discuss the specifics of the legal issue, it will need to be around four pages long.

Usually, a business dispute with real estate might require some explanation. If it’s a simple payment issue, it’s ordinarily simple.

The lawyer might write, “Our client demands that you pay the $10,000 invoice that is now 120 days overdue… etc.”

Small Claims Court

A demand letter should include some information. The letter should explain the debt owed and how many business days the other person has to respond. Normally, the number of business days is 10. If the money owed is unpaid, a claim can be filed in small claims court.

In some provinces, when the amount is larger than $35,000, it must be filed in the Supreme Court (British Columbia) or Superior Court (Ontario).

If you need a lawyer to send a demand letter to in BC or Ontario, we have lawyers to help. When you receive a demand letter, we can have one of our lawyers or paralegals respond. That might scare the person off from filing a claim.

Many people who write demand letters are looking to see if the person will respond. They can get a default judgment if they file a claim in small claims court without a response.

That means they automatically win the claim. If you want to see what a sample demand letter looks like, read on!

Child Support And Custody

You can send a legal letter to push for child support and/or custody. The letter explains why you want custody of the child and what kind of visitation you offer.

The letter will show the expenses you cover each month for child support payments and perhaps ask them to pay half of these expenses.

Sending a legal letter before starting a lawsuit is often a great idea. It can save a lot of time and stress.

Breach Of Contract

People have two years to file a lawsuit; otherwise, they cannot. If they miss the two-year deadline, they are out of luck.

If you send a demand letter yourself, the other side will probably not respond. It is better than a letter of payment from a law firm.

What’s Included In A Demand Letter?

Sometimes, the matter is more complex. The law firm will write the legal reasons why the person needs to do whatever is asked. Sometimes, it will detail what will be filed in the lawsuit.

Sometimes, it will explain that the person might be required to pay the law firm’s legal costs if they lose the lawsuit.

A demand letter shows that the person or company is serious. Therefore, it is not unlikely that they would file a lawsuit. Emailing and calling yourself does not show that you are serious.

It shows that you are afraid to spend money on a lawyer.

Demand Letter Sample

VIA EMAIL, REGISTERED AND REGULAR MAIL

Bob Smith
1111 Fake Street
Toronto, Ontario

Dear Sir:

Re: Indebtedness to ABC Ltd.

We are the business lawyers for ABC Ltd.

On January 23, 2018, you executed a retainer agreement with ABC Ltd. to assist you in a forensic accounting investigation of ZXC Co’s financial affairs.

ABC Ltd. performed professional services for you from May 1, 2019, to June 1, 2020, by the Retainer Agreement. On June 25, 2020, ABC Ltd. issued you Invoice No. 112212 for $42,840 (the “Invoice”).

The retainer of $15,000 was applied to the Invoice. Interest accrues on the remaining balance outstanding of $27,840 at the rate of 1.5% per month (19.56% per annum). As of May 19, 2020, you are indebted to ABC Ltd. in the amount of $27,840 plus interest in the amount of $10,318.41, for a total outstanding amount of $38,158.41.

On behalf of our client, we hereby demand that you make a demand for the total amount outstanding of $38,158.41. Payment in full must be made to “HJK LAW in trust” by way of a certified cheque or bank draft within ten days of the date of this letter; otherwise, legal proceedings may commence against you without further notice.

Yours truly,

HJK LAW

Per: Lawyers Name
Law Corporation

Collecting Payment

The payment letter is also seen well by the courts. It shows that the plaintiff tried to resolve the issue without going to court. Judges get annoyed when people rush into litigation or lawsuits without trying to settle.

Send A Demand Letter For Payment

The wording in the letter can be used in court. If you write your demand letter and make mistakes, it gives a good reason for the defendant not to pay. The defendant can explain that the payment letter was incorrect. So why should they pay?

If you can avoid going to court, it will save you time and money. Going to court is also stressful, and a lawsuit can go on for many years.

If you receive a letter, you should never ignore it. It’s important to respond or get your lawyer to respond to it. Explain your position and why you pay some of the amounts. You can also explain why you can’t pay for anything.

It’s best to send the demand letter by email, registered mail, and regular mail. This again shows you are serious. You need to be able to show that they received your legal. Sometimes, emails go directly into spam.

Let us know if you need a paralegal or lawyer to create a demand letter for payment or child support.