If somebody owes you money, no matter the reason, you may be frustrated and unclear of what to do next. Without a clear-cut way of securing compensation, you may start to worry about your ability to secure payment. We always recommend that our clients try the easiest and most simple alternatives before turning to more cumbersome and expensive methods. One such alternative means of receiving compensation is delivering a formal demand letter to the non-paying party.
Here we explain the basics of a demand letter.
“What’s Love Got to Do With It?”
Simply put, a demand letter should let the other party know that this is business. And in business, you need to get paid. A good demand letter, though cordial and polite, should be extremely clear about your serious intention to collect compensation. It should be short, to the point and clear about your request. Though the demand letter should command respect, it should also avoid personal attacks on the non-paying party. Because it is always better to leave anger and disparagement out of the demand equation, avoid unnecessarily harsh or inappropriate language.
What to Consider
Before writing a good demand letter, you should ask yourself the following important questions:
1. What do we both want?
2. What are the risks for both parties?
3. How much time will this take?
4. Are there any statutes or contractual provisions that require a demand be sent? If you’re in the construction industry, for example, you may want to take advantage of prompt payment and lien statutes, with something like a notice of intent to lien.
By knowing the answer to these basic questions, you can better organize and structure your demand letter.
The Formula to a Successful Demand Letter
There are some important components of a good demand letter. Firstly, you need to provide a brief chronological overview of the relevant facts of the dispute. Even if the other party knows these facts, it is important to identify them here in case a judge our court ever reads this letter in the future.
You may also want to identify the potential risks of non-payment, especially the costs associated with lengthy litigation. Make your demand letter look professional and specify the resolution that will satisfy your needs. By being clear about the facts and the consequences, you can help ensure that the other party is too. Additionally, if you and the debtor are bound by a contract and a “notice” is required beforehand, make sure the demand letter conforms to the notice requirement.
Lastly, an experienced attorney should help your formulate your demands and draft your letter in a cohesive and legally significant manner. If you have questions about or want to draft a demand letter, contact the attorneys at Smiley Law today. With years of experience in drafting demand letters, our attorneys can help make sure you receive the compensation you deserve without rushing to court.