Why do I need a Letter Demanding Payment of Debt?
If your business is owed money for the supply of goods or services to a customer, and informal requests for payment haven’t been successful, our Letter Demanding Payment of Debt acts as a formal demand for payment before resorting to legal action.
Hopefully, it encourages your customer to pay. If not, it records your position for any dispute that follows.
Who is the Letter Demanding Payment of Debt?
Any business owed money, where previous attempts to either recover the debt or resolve the dispute (if the customer disagrees the debt is owed), following any procedures set out in your terms of sale, have failed, and the business may take legal action over the outstanding amount.
How long will it take to create my document?
Less than 5 minutes – faster than doing the wordle! During the Q&A you can save your progress to come back later, or repeat the Q&A to change an answer or produce a new version of a document.
What information do I need to complete the Q&A?
- the name and contact details of the person or business that owes the debt
- the amount owed and a description of what service/product the debt relates to
- the date of the invoice and the date the invoice was due to be paid
- whether your terms of trade/terms of sale/quote allow you to charge the debtor interest on the outstanding amount (and if so, at what interest rate) and for the costs of recovering the debt (eg, debt collection fees, lawyers fees).
- the date you demand payment to be made before you will start legal action over the outstanding amount
What other names is a Letter Demanding Payment of Debt called?
- Letter of demand
- Debt collection letter
- Demand for payment
What do I do once my document is created?
The letter is ready to sign and send as soon as you have downloaded it. Attach a copy of the relevant invoice and send it to the debtor. The letter must be sent to the ‘address for notices’ stated in your contract or terms of sale with the debtor. Make sure you keep proof of delivery of the letter to the debtor (such as courier or registered post receipt, or include a ‘read receipt’ if sending by email). As there is a risk the email won’t be opened, physical delivery is preferred. If the debtor still doesn’t pay, we recommend you discuss your options with a lawyer or debt collector.
Other helpful information:
- You may also find these bundles or documents useful for your business: Services Agreement, Terms of Trade Bundle, Product Supply Agreement and check out our blog What do I do if my client won't pay?
- Check out our FAQs here
If you have any questions, reach out to us at hello@onyourterms.co.nz – we’re happy to help!
If you’re not satisfied with your purchase of this product for any reason, let us know why within 10 days of your purchase and we’ll work with you to make sure you’re happy, including giving you a full refund if necessary.
Disclaimer: On Your Terms was created to provide fast, easy and affordable access to legal information and documentation. We are not a law firm and do not provide legal advice. The information and documents we provide are of a general nature, designed for common situations, and may not be suitable for your needs or circumstances. If you need legal advice, we have a network of specialist law firm partners able to help you here.