How do I write a letter of demand?

Head the letter "Letter of demand" so there's no doubt what it is. Then cover:

• Who owes the money. Use the debtor's correct legal name. For a business, check ABN Lookup or the ASIC register, and address it to the owner or a director.
• The amount and what it's for. List invoice numbers, dates and the goods or services supplied.
• The basis for the debt. Refer to the contract, quote or terms of trade and the date payment fell due.
• Interest, but only if your contract allows it.
• A deadline. Give a specific date, not "as soon as possible".
• What happens next. For example, that you'll start a claim in court or a tribunal if the debt isn't paid by that date.
• How to pay. Bank details, a payment link and a contact person.

Attach copies of the contract, invoices and earlier reminders. Sign and date the letter.

Firm and factual works better than angry. Stick to what you can prove, leave out opinions about the debtor, and avoid sarcasm or insults. Assume a magistrate may read the letter one day.

If you'd accept instalments, say so and ask the debtor to contact you before the deadline. A letter that leaves a door open often gets paid faster than one that doesn't.

Email is fine for speed, but also send a copy by registered post and request signed proof of delivery. Keep that proof, a copy of the signed letter and all attachments. If you go to court later, you'll need to show the debtor received a clear demand and had a chance to pay.

The ACCC and ASIC debt collection guideline sets out what creditors and collectors must avoid. It's written mainly with individual debtors in mind, but the regulators say many of the same laws apply to business debts. In short:

• don't threaten legal action you can't take or don't intend to take
• don't add fees or interest you have no contractual or legal right to charge
• don't make the letter look like a court document or suggest you have official authority you don't have
• don't say non-payment is a police or criminal matter when it isn't
• don't harass, for example by contacting the debtor excessively or at unreasonable hours, or by raising the debt with their family or employer

Undue harassment and coercion in connection with payment for goods or services is prohibited under the Australian Consumer Law.

A letter on a law firm's letterhead often gets a faster response, because it shows you're prepared to take the next step. It's worth considering when the debt is large, when the debtor has ignored your own letter, or when you're preparing for court or a statutory demand. A Sprintlaw lawyer can prepare and send a letter of demand for a fixed fee.