Demand letter for payment: free template and best practices

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Essential details for an effective demand letter for payment

Because a formal demand letter may be used as evidence and help you comply with pre-action requirements, it should follow clear best practices and include specific information (amount owed, basis of the claim, deadline, consequences of non-payment, etc.).

When sent as a final step before court, it should also align with UK pre-action guidance (for example the Civil Procedure Rules’ pre-action conduct and protocols).

To strengthen its evidential value, the demand letter should be sent in a way that provides proof of delivery, for example by recorded delivery (signed-for post) or by email where this is customary in your relationship with the customer. You can send it yourself or ask your legal or recovery partner to prepare and send it on your behalf.

Because a formal demand letter can be used as evidence and, in some cases, to comply with UK pre-action protocols, it should normally include:

• date of issue
• sender’s details
• recipient’s details
• description of the dispute and legal basis (invoice, contract, etc.)
• amount owed and any interest or fees
• a clear and reasonable payment deadline
• the potential consequences of non-payment (for example legal action or referral to a debt collection agency)
• a clear subject line (for example: “Formal demand for payment: invoice [number]”)

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Writing an effective formal demand letter

Although simple to prepare, a formal demand letter must be drafted carefully to prompt a reaction and stand as valid evidence should the dispute escalate.

Does it need to be handwritten?

No. A demand letter for payment can be handwritten or typed, provided all mandatory details are included and the claims are supported by evidence.

When should you send a demand letter for payment?

Timing is critical. Although quick to prepare, a formal demand letter should not be sent too early.

It becomes appropriate only after all amicable options have been exhausted, including:

• email reminders
• SMS reminders
• phone calls
• attempts to agree on a payment plan

Given the potential legal and financial consequences (court action, bailiff fees, lawyers, late payment penalties), you should weigh this decision carefully. It may save you time and money and help preserve the business relationship where possible.

There is no minimum period before you can send a demand letter, but you must stay within the legal limitation periods. In England and Wales (and most of the UK), unpaid invoices under a simple contract are generally time-barred after 6 years from the due date. In Scotland, many unsecured debts prescribe after 5 years without payment or court action.

Once the limitation or prescription period has expired, the debtor can usually defend a court claim on that basis.

🎁 Free template: demand letter for payment

Here is a ready-to-use formal demand letter template you can copy and adapt as needed. It includes all required information for a compliant demand letter for payment.

Demand letter sent by recorded delivery / signed-for post

Subject: Formal demand letter for payment

Dear Sir or Madam,

Despite several reminders that remained unanswered, you still owe the amount of [amount] € relating to invoice [number] issued on [invoice issue date] and due on [invoice due date].

This delay is causing significant harm to our business.

We therefore issue this formal demand letter for payment for the sum of [total amount] €, consisting of the invoiced amount of [invoiced amount] € plus late payment fees of [amount] €, in accordance with our terms and conditions and the Late Payment of Commercial Debts (Interest) Act 1998.

If payment is not made within [number of days] days from receipt of this letter, we will initiate legal proceedings before the appropriate court.

Kind regards,

[Signature]

(Amounts shown in euros are for illustration; replace with the appropriate currency.)

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What happens after you send a formal demand letter?

Once the demand letter for payment has been received and confirmed, two scenarios are possible:

1. Your customer responds within the deadline

They settle the invoice and the issue is resolved. You may continue your commercial relationship.

2. Your customer still does not respond

If your customer still does not respond after the deadline, you can escalate to formal legal recovery with a qualified professional (solicitor or debt recovery specialist). In the UK, common options include:

• Sending a Letter Before Action (or Letter of Claim) that complies with the relevant pre-action protocol and gives the debtor a final deadline before court proceedings.
• Issuing a County Court claim for the unpaid amount (plus interest and costs) through the Money Claim Online service or on paper (form N1).
• In serious B2B cases, serving a statutory demand to initiate winding-up proceedings.

If the debtor is already in administration or liquidation, specific insolvency rules apply and you may need to submit a proof of debt rather than starting your own court action.

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What if you receive a formal demand letter?

If you receive a demand letter for payment that you believe is unfounded, you can challenge it. Common reasons include:

• the debt is incorrect or does not match what was actually agreed,
• key information or supporting documents are missing,
• the claim may be time-barred (limitation or prescription period has expired).

You should write back to the creditor explaining your position and, if necessary, seek legal advice.