Letters of demand, the formal last warning.
A letter of demand is a formal written demand for payment. It tells the debtor exactly what they owe, gives a final deadline and makes clear what happens next. Often, it’s the step that finally gets an invoice paid.
In short
- A formal written demand stating the amount owed, a deadline to pay and what happens if they don’t.
- It usually gives a short, specific deadline, often 7 to 14 days.
- It creates a clear paper trail if the matter ever goes to court.
- A business or a recovery firm can send one; it doesn’t have to come from a lawyer.
- ARS Financial includes a letter of demand at no extra charge on every recovery case.
What a letter of demand should include
- Your business details, and the debtor’s full name or registered company name.
- The amount owed, with the invoice numbers and dates it relates to.
- A clear deadline to pay, and how to pay: banking details and a payment reference.
- Any interest you’re entitled to claim, and how it’s calculated.
- What you will do if they don’t pay by the deadline.
- The date, and proof of how it was delivered (email, registered post or by hand).
Want to send one yourself? Use our free letter of demand template, which puts all of this in the right order.
When to send one
Once your own reminders and calls have failed, usually when an invoice is 30 to 60 days overdue. Don’t leave it too long: most ordinary debts prescribe after three years, and a letter of demand on its own doesn’t stop that clock.
Why letters of demand work
A formal letter shows the debtor that you’re organised and serious, and that the next step is a legal one. Many debtors who ignored friendly reminders respond once the tone changes and the deadline is in writing.
Letters of demand and the National Credit Act
The National Credit Act has its own rules, including a specific notice under section 129, for the credit agreements it covers. Whether it applies depends on the type of agreement and who the debtor is. If you charge interest or fees on overdue accounts to individuals or small businesses, check with an attorney which rules apply to you.
How ARS Financial handles it
On every recovery case, if the debtor keeps stalling after our reminders and calls, we send a formal letter of demand on ARS letterhead at no extra charge. It’s drafted around your invoice and the debtor’s conduct, and it’s logged on your case so you can see exactly when it went out.
Frequently asked questions
No. A business or a recovery firm can send a letter of demand. A letter from an attorney can carry more weight, and you will need an attorney if the matter goes to court.
There’s no single rule for commercial debts, but a short, specific deadline works best, commonly 7 to 14 days. Check your agreement with the customer in case it sets a notice period.
Yes. Email is common and fast. Keep proof that it was sent and, ideally, that it was received. Your agreement with the customer may also say how notices must be delivered.
No. On its own, a letter of demand doesn’t interrupt prescription. The debtor acknowledging the debt, or a summons being served, does.
Then the options are a payment arrangement, handing the matter to an attorney for legal action, or deciding whether the amount justifies it. We’ll talk you through it honestly.
Hand us the invoice. We’ll take it from here.
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