Key points

  • A letter of demand is a formal written request for payment of an overdue invoice, usually sent after friendly reminders haven’t worked.
  • Send polite reminders first, with a correct copy of the invoice and a clear due date.
  • A good letter of demand states what is owed, what it is for, a specific payment date and what you may do next, in a polite tone.
  • If the client replies with anger or threats, answer only the practical points and keep everything in writing.
  • FenceChat filters hostile replies from a client while keeping every original message, so chasing payment doesn’t mean reading abuse.

A friendly note: This guide shares general information to help you understand your options. It isn’t legal advice, and it can’t tell you what to do in your own situation. For that, a lawyer or a free legal service is the best next step, and you’ll find some in Where to get help.

What is a letter of demand?

A letter of demand is a formal letter asking someone to pay money they owe you by a set date. Small businesses, freelancers and tradespeople most often use one when an invoice is well overdue and reminders have been ignored. In the US it is usually called a demand letter.

It isn’t a court document, and sending one doesn’t start legal action. It does show you are serious, it gives the client a last clear chance to pay, and it creates a record that is useful if you later go to a small business commissioner, a tribunal or a court.

Before you send one: overdue invoice reminders

Most late payments are sorted out with a friendly nudge. Before a letter of demand, it is good practice to send one or two reminders:

First reminder (a few days overdue): “Hi, just a friendly reminder that invoice 1043 for $2,400 was due on 3 March. I’ve attached a copy. Could you let me know when it will be paid? Thanks.”

Second reminder (two to three weeks overdue): “Hi, invoice 1043 for $2,400 is now three weeks overdue. Please arrange payment by 31 March. If there is a problem with the invoice or the work, let me know so we can sort it out.”

Check your invoice is correct, addressed to the right person, and clear about the due date and how to pay. business.gov.au has practical guidance on what to do when you haven’t been paid.

How to write a letter of demand

The Australian Government’s guide to writing a letter of demand suggests including:

  • the heading “Letter of demand”
  • the name of the person or business that owes the money
  • how much is owed, what it is for, and a specific date by which it must be paid
  • late payment interest, but only if your contract allows for it
  • what you may do if it isn’t paid, mentioning only steps you are actually prepared to take
  • copies of the contract, invoice, reminders and relevant emails
  • your signature and the date

Keep the tone polite and the facts accurate. A letter that is angry, exaggerated or threatening can work against you.

Letter of demand template

Here is a simple template to adapt. It is general and won’t suit every situation, so check it against your own contract and get advice if the amount is large or disputed.

LETTER OF DEMAND
[Date]
[Client name and address]

Dear [name],

Re: Unpaid invoice [number] for $[amount]

We supplied [goods or services] to you on [date] under our agreement dated [date]. Invoice [number] for $[amount] was due on [date]. We sent reminders on [dates], and the amount remains unpaid.

Please pay $[amount] by [specific date], into [payment details].

If payment is not received by that date, we may [take the next step you are prepared to take, such as lodging a claim with the relevant tribunal or court] without further notice.

If you believe this amount is not owed, or you would like to discuss a payment plan, please contact us by [date].

Yours sincerely,
[Name, business name, ABN, contact details]

Many businesses give 7 to 14 days to pay. Whatever you choose, give a specific date rather than “soon”. The Queensland Small Business Commissioner publishes a free letter of demand template, and the basics are similar in NSW, Victoria and other states.

How to send it and keep a record

Send the letter by email and by a tracked method such as registered post, and keep proof of delivery. Save copies of everything: the invoice, reminders, the letter, and any reply. Put each message in one folder or thread so the history is easy to follow. If the client works for a company, address it to the business owner or accounts contact, not only the person you dealt with day to day.

If the client replies with anger or threats

A letter of demand sometimes triggers an angry reply: complaints about the work that were never raised before, threats of bad reviews, or personal insults. Stay calm and stick to the facts:

  • Answer only the practical points. If they raise a genuine issue with the work, acknowledge it and suggest a way to resolve it.
  • Don’t trade insults or threats. Anything you write may be read later by a mediator or tribunal.
  • Restate the request once: “Thanks for your reply. If you have concerns about the work, please send details by Friday. Otherwise, the amount of $2,400 remains due by 31 March.”
  • Keep it in writing. Avoid heated phone calls, or follow any call with an email summary.

If the relationship is turning sour more generally, see when a client relationship turns hostile and how to communicate during a business dispute.

If the invoice still isn’t paid

Your options depend on the amount, your contract and where you are. Common next steps in Australia include:

In the US, most states have a small claims court for smaller debts, and the Small Business Administration has resources on getting paid. Rules and limits vary, so check your state court’s website.

How FenceChat helps: Chasing money is where client messages often turn nasty. FenceChat filters hostile, abusive language out of a client’s emails and texts before you read them and passes on what matters, such as payment dates, disputes about the work and offers to settle. You can also give clients a FenceChat number instead of your own mobile. Every original message is kept in your Archive and can be exported if you need to show a commissioner or tribunal the history.

Where to get help

These services are free or low-cost. If you or someone else is in danger, call your local emergency number first.

Australia

Small business

  • business.gov.au Government guidance for small businesses, including disputes.
  • ACCC Consumer and competition law, including business rights.

Free or low-cost legal help

United States

Small business

Free or low-cost legal help

United Kingdom

Small business

Free or low-cost legal help

Frequently asked questions

What is a letter of demand?

A letter of demand is a formal written request for payment of money owed, such as an overdue invoice, by a specific date. It is usually sent after friendly reminders, and it isn’t a court document. In the US it is often called a demand letter.

How long should I give in a letter of demand?

There is no single rule. Many businesses give 7 to 14 days. Whatever you choose, give a specific date rather than a vague timeframe, and check your contract for any payment terms.

Is there a letter of demand template for NSW?

The basics are the same across Australian states: what is owed, what it is for, a payment date and your next step. The Queensland Small Business Commissioner publishes a free template, and business.gov.au explains what to include. This guide has a simple template too.

Do I need a lawyer to send a letter of demand?

No, many businesses write their own. For large or disputed amounts it is worth getting advice, and a letter on a lawyer’s letterhead can sometimes prompt payment. This guide is general information, not legal advice.

How does FenceChat help when chasing an unpaid invoice?

FenceChat filters hostile language out of a client’s emails and texts and passes on the practical points, like payment dates or disputes about the work. Every original message is kept in your Archive and can be exported if you need it.