When Should You Send a Letter of Demand for an Unpaid Invoice?
Why Send a Letter of Demand?
A letter of demand is a formal written request for payment of an unpaid invoice in Australia and is often the final step before commencing legal action. It outlines the amount owed, the basis of the debt, and the consequences of non-payment.
What Should a Letter of Demand Include?
A clear letter of demand typically outlines:
- The amount owing
- How the debt arose
- Relevant invoices and due dates
- A final date for payment
- Intended next steps (e.g., legal action or debt collection)
Well-drafted letters demonstrate seriousness and assist if the dispute escalates.
When Is the Right Time to Send One?
Businesses usually send a letter of demand when:
- The invoice is well overdue
- Informal reminders have been ignored
- A payment plan has been breached
- The debtor has stopped communicating
The letter formalises the dispute and creates a record of reasonable attempts to resolve it, which is why a letter of demand for an unpaid invoice in Australia is commonly used at this stage.
What Happens If the Debtor Still Doesn’t Pay?
If the debtor ignores the letter, businesses may consider:
- Negotiating a settlement
- Engaging a debt collector
- Commencing legal proceedings
- Issuing a statutory demand (for companies owing over the statutory threshold)
Early legal advice can help determine the best strategy.
Why Get Help Drafting a Letter of Demand?
A lawyer can ensure your letter is accurate, legally sound, and effective.
For help preparing or enforcing a letter of demand, contact Gladwin Legal.