What is a Demand Letter and when do you use it?

I'm sure you have heard the term Demand Letter before, especially if you have ever had a past due payment or a client completely ghost you on a payment. If not, or if you are a little unsure about what it actually is and does, let's talk about it!


As hard as we try, as many procedures we put in place, we can never 100% count on clients to pay us, even if you get paid in full upfront, some things can still happen. We'll talk about that in another post because this one is dedicated to understanding demand letters - I have no doubt you will have to use one at least once. If not, you are oh, so damn lucky!


Demand letters can be used for various things, such as demand for payment, restitution, demand to cease and desist, damages to property, etc. Obvs we are going to talk about Payment demand letters. Should a client become significantly delinquent on a payment or completely ghost you on a payment and your attempts to rectify the matter with phone calls and emails do not work, your next step should be a demand letter. You don't want to jump straight to a collection agency or something similar. Of course, you can, but you want to have as much proof as possible to show you made significant and proper steps to resolve the matter before collections and legal action.





A payment demand letter is just that, a demand for payment. It informs your client (again) that per your contract they are obligated to pay you the amount and date agreed upon. You want to state exactly how many days late they are and that they have a certain amount of days to remit payment or to contact you to make other arrangements. That is optional, but I do recommend writing that in - it would be an easier blow to the client knowing that they may be able to set up payment arrangements or receive a discount of some sort if they make the payment in full.


Legally, you do not need an attorney to draft a demand letter, but it will give an extra "oomph" to the letter, especially if you cannot afford an attorney right away or it is a small amount that may not warrant the cost of an attorney. To add extra "oomph" in your letter, you simply say that if payment is not made by the date specified you will seek legal action.


The hope is that a formal letter like this will "scare" (I hate to say that, but that's what it does) the client into paying you or setting up payment arrangements. Should a demand letter not work and you do have to take legal action, contract, emails, copy of the demand letter will show ample proof that you attempted to sort this out 1:1 with the client first.




If the time comes and you need to send this letter, this is the EXACT reason I say to get a clients address. Yes, you can send this via email but my lawyer explained to me that only sending legal forms via email will not always hold up in court because you cannot 100% prove the person opened the email or that is was them who opened the email. Therefore, send the letter via certified mail to their address as well as via email.


Collecting an address is not illegal, overreaching or inappropriate.

It is public information anyway. If a client blocks you in every way they can, you are completely SOL.


I have a FREE copy of a demand letter on the Share The Love page. Even if you don't need it now, download it so you have it on-hand.



x,

MW




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