What is a Letter of Demand (Friendly reminder)?
A Letter of Demand (Final reminder) is a short, clear final demand for payment of amounts due. It states the debt that is owned, why it is owned etc.
How to create a Letter of Demand (Friendly reminder)
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Typically, you’ll want to issue a friendly reminder to a Letter of Demand when you want to keep things cordial with your working partners. Essentially, as a small business, managing cash is an important part of day-to-day operations. Thus, instilling a smooth workflow to communicate reminders of overdue payments ensures a collections process that is effective and efficient.
Importantly, a formal and process-driven set of communications using well-written templates goes a long way to ensure you can collect payments in a courteous and timely manner. Additionally, this letter can also be called a Collections Letter. Or, a Past Due Invoice Letter or Notice of Overdue Payment
What is in a Letter of Demand Friendly Reminder?
Basically, this is a short, crisp and factual letter that is sent out on a regular basis and using a standard process. Essentially, this can take much of the emotions out of the collections process. Ensure you have the following:
Contact Details of the Customer – Include at least the address, telephone number and the email address.
Amount Overdue – The amount that needs to be paid by the customer.
Invoice Reference – It is always good to refer back to the invoice in question. And mention the date in which it was raised to increase the sense of urgency.
Your Contact Details – Always give the customer as much information as possible to contact you to help resolve the issue.
When Should You Use a Letter of Demand Reminder?
Typically, a formal notice can be sent any time after the invoice is past due and you have yet to receive payment. Importantly, make sure that there is a process of escalation if you do not receive payment after 2 or more attempts at contact.
What happens if there is no response to the demand letter?
After a demand letter is sent, the recipient generally sends some form of response.
Usually, they either acknowledge and comply with your request or at times they send it back with a counteroffer. However, there can be cases where they choose to ignore you and so you receive no response to your demand letter. If there is no response even after the due date mentioned in your demand letter, you can contact them to confirm if they have received or even send in a second follow-up letter. For more serious cases, you can escalate it by consulting with your legal advisors and proceeding legally to file a lawsuit.
In general, a proper and courteous letter when payments are past due will always help to keep a cordial relationship with the customer. Use this handy letter as the first step in collecting. And, ensure that you have a series of escalating letters if payments have still not been made.
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