When should you send a letter of demand?
A stronger letter needs a checked account
A signage contractor has sent an invoice, a reminder and a follow-up email. The customer acknowledges the account but keeps delaying a response about payment. The contractor is considering a letter of demand, yet has not checked whether a small credit agreed on site was applied. Sending a stronger letter before checking the account could turn a useful escalation into an avoidable dispute.
Confirm the demand is accurate
Reconcile the amount against payments, credits and the agreed terms. Identify the correct debtor and why payment is due. Keep the documents supporting those points together before drafting a letter.
If the customer has raised a genuine objection, record it and consider whether it needs investigation first. A demand does not answer a dispute merely by using formal language. Your account of the debt should remain accurate even when the recipient disagrees.
Use the letter for a specific purpose
Business.gov.au describes a letter of demand as a step after less formal payment attempts have failed. It should make the claim and requested response understandable. The customer should be able to identify the transaction without guessing which account you mean.
Choose a response date that is appropriate to the circumstances and any legal advice received. Do not present your chosen date as a statutory deadline unless that is actually the case. A contractual demand, a court document and a statutory demand are different instruments.
Keep the proposed action realistic
Only describe action that is genuinely under consideration and legally available. Avoid claims that a judgment, asset seizure or winding up is automatic. Have legal wording reviewed where the amount or circumstances warrant it.
Decide internally what happens if the customer pays, proposes instalments, disputes the account or says nothing. Without that decision, the demand risks becoming another reminder with a more forceful heading and no practical follow-through.
Preserve delivery and review the response
Use an appropriate address and method, retaining the letter and delivery record. If formal service is required for the intended process, have those requirements checked. An email being sent is not always the same as valid service.
Diary the review date and ensure someone reads any reply promptly. A reasonable response may lead to settlement; silence may justify a recovery assessment. The value of the letter lies in moving the account towards a decision while preserving a clear record.
Set a factual demand and follow-through
Reconcile the claim and identify the correct debtor.
Prepare a factual demand with a clear response request and realistic next step.
Keep delivery evidence and review the response on the chosen date.
Call CRP today about preparing an overdue account for the appropriate recovery step.