How to draft an effective Final Demand Letter
How to draft an effective Final Demand Letter

What is a Final Demand Letter
A Final Demand Letter is a formal document sent to a customer by a business or SME to giving formal notice potential court action to obtain a county court judgment for unpaid debts. The most common type of Final Demand Letter is demand for payment of a debt owing for example, a late payment or an overdue invoice for goods or services. Final Demand Letters are sometimes also referred to as “letters before action” due to the fact that such letters are generally sent as the final stage before issuing a county court claim filed in court.
Why you should send a Final Demand Letter
There is not real obligation to send a Final Demand Letter to demand payment of a unpaid debt owed. Some businesses or SME’s instigate legal proceedings without taking any form of debt recovery action.
In some circumstances a creditor may be obligated to send a final demand letter before taking legal action can be pursued. For instance, a contract or terms and conditions between both parties may include a specific provision that obligates the creditor to first send a Final Demand Letter to the debtor before the creditor is entitled to commence legal proceedings.
Where there is no legal obligation on a creditor to send the debtor a Final Demand Letter, we recommend that sending a Final Demand Letter is a great way to prompt the debtor to make payment of a debt. This then can be used as evidence in any legal proceedings to demonstrate to the court that all avenues have been exhausted before taking court action.
What should a Final Demand Letter include?
In case legal action is required in the future, a well presented, a properly drafted Final Demand Letter for payment of an unpaid debt should include the following information:
- the amount owed.
- how the amount has been calculated (either explain your calculations or provide the invoice).
- proof of debt (e.g., unpaid invoice, proof of contract or agreement).
- copies of all correspondence and any promises to pay;
- date stipulating when payment must be received; and
- next course of action if no payment or response is received.
Reasons for sending a Final Demand Letter?
We advise all business intending to contemplate legal action to a Final Demand Letter before commencing legal proceedings. This will then allow the debtor to respond saving the courts time or expensive legal costs as the debtor may respond claiming:
- they don’t know exactly what is owing, or claim ignorance of the unpaid debt;
- the debtor could pay upon notice, or offer a payment plan;
- the debtor might place your debt as their first priority for payment;
- the Final Demand Letter can be used as evidence to support any legal proceedings;
- the debtor may dispute the debt owed.
When should I send a Final Demand Letter?
Best practice is to issue a Final Demand Letter after no response to reminders, telephone calls, usually 60 days after the unpaid debt becomes overdue. This allows any business or sme with an ongoing relationship opportunity to resolve the late payment before sending a formal Final Demand Letter. We advise that all reminders and a telephone calls process is exhausted before sending a Final Demand Letter to preserve any ongoing relationship.
Email and registered post generally are the best process to follow thus providing you with proof of when the Final Demand Letter was received and who by.
