A letter of demand is a formal written demand for payment, usually the last step before legal action or handing the account to a collections agent. It is not a stronger follow-up email. It is a different kind of document and it should read like one.
When to send a letter of demand
After the ordinary sequence has run and produced nothing: the reminder, the phone call, the statement, the formal notice. If you are sending a letter of demand at day 14, you have skipped the steps that usually work.
- The invoice is well past due, typically 45 to 60 days
- You have made contact and either had no response or had promises that were not kept
- The amount justifies the escalation
- You have checked your own paperwork and the invoice is correct
What it should contain
- Your business details and the client's
- The invoice number, date and amount outstanding
- A short history of the attempts to collect
- A clear demand for payment of a specific amount
- A deadline, commonly seven or fourteen days
- What will follow if the deadline passes
- Banking details and a reference
Keep it factual. A letter of demand that reads as angry is weaker than one that reads as procedural, because the second one sounds like the start of a process rather than the end of a temper.
Before you send it
Two practical points. First, be prepared to follow through, because a deadline that passes without consequence tells the client the letter meant nothing. Second, for larger amounts many businesses have an attorney send it, both for the weight it carries and because the wording matters more as the amount grows.
It is also worth knowing that ordinary contractual debts prescribe after three years in South Africa, and that acknowledgement of the debt in writing by the debtor interrupts that period.
Common questions
Can I write it myself?
You can. For larger amounts, or where you may litigate, having an attorney send it is common practice. Confirm the right approach for your situation.
Does it have to be sent in a particular way?
Keep proof of delivery, whatever the method. Email with a delivery record is widely used.
What if they still do not pay?
The usual routes are a collections agent or legal action, and which is worth it depends on the amount and the debtor.
Clear terms and a visible due date on every invoice make this conversation far less likely.
Start invoicingDisclaimer: This content is for general information only and does not constitute legal, tax, accounting or financial advice. Always confirm important requirements with SARS, the relevant authority or a qualified professional.
