Demand Letter To Pay (Free Template)

Struggling to get paid by clients for services rendered, work completed, or goods sold? Fortunately, you have options to receive the money you are rightfully owed. Before filing a small claims lawsuit against a client, consider writing a demand letter to pay. In this article, we offer suggestions, examples, and a sample demand letter. 

Did you know we have a free tool powered by AI that helps you create a demand letter to pay? Check out our demand letter tool.

When Should You Send a Demand Letter to Pay? 

There are different reasons why someone would send a demand letter to pay. Below, we discuss some common examples:  

• Work Completed. Imagine you are a contractor who has completed renovating a client’s kitchen for 8,000 dollars. Your client has yet to pay for the work completed, and your attempts to contact the client have been unsuccessful. Before filing a lawsuit in small claims court, a demand letter to pay in this situation would be a useful tool for you to get your money back for work completed. 

• Services Rendered. Imagine you are a personal trainer, and you have a client sign up for eight one-hour sessions. At the end of the eighth session, your client refuses to pay the amount you are owed, and your attempts to contact the client have been unsuccessful. Before filing a lawsuit in small claims court, a demand letter to pay in this situation would be a useful tool for you to get your money back for services rendered. 

• Goods Sold. Imagine you sell appliances, and a client has recently purchased a dishwasher using a monthly payment plan. Your client has yet to pay a single installment, and your attempts to contact the client have been unsuccessful. Before filing a lawsuit in small claims court, a demand letter to pay in this situation would be a useful tool for you to get your money back for goods sold. 

Why is Sending a Demand Letter to Pay Important?

A strong demand letter to pay is a very useful tool for business owners trying to receive payments from clients. 

Here are at least 3 good reasons to first send a demand letter to pay before suing your client in small claims court: 

1. Demanding payment from your client may be required before filing a lawsuit in small claims court, depending on what state you are filing a small claims court lawsuit. A demand letter to pay is an effective way of completing this requirement.

2. Sending a written demand letter to pay creates a record of how much and why your client owes you that amount. Demand for payment can be made orally. However, we recommend written demands. You could demand payment via text message, but writing a letter can be very effective as it is a more formal method. 

3. The demand letter to pay could lead your client to pay you without having to take them to small claims court!

Learn more about why it is worth sending a demand letter before taking legal action. 

Do I Need to Hire an Attorney to Write a Demand Letter to Pay? 

There is no requirement that states you need an attorney to write a demand letter. You can write and send a demand letter on your own. When deciding whether or not to hire an attorney to write a demand letter, consider some of the factors below:

• Cost. Hiring an attorney can be expensive, and the cost of drafting a demand letter may not be worth it for smaller claims. 

• The complexity of your case. For some issues, you may need an attorney’s expertise in a specific area of law. For example, if you have a potential negligence claim against someone, it may be worth discussing your claim with a lawyer, as this type of law can be quite nuanced. 

How to Write a Demand Letter for Payment 

Unsure of what to include in your demand letter to pay? Below, we have included some important elements to include in your letter.

At the Top of Your Letter Include: 

• Your Contact Information: The client needs a way to contact you in case they would like to reach a resolution to your dispute. 

• How the Letter is being Sent: For example, if you sent your demand letter by certified mail, add a line that states this at the top of the letter. 

• How Much Money You Are Owed: Clearly state at the beginning of your letter how much money you are demanding the client pay you. 

In the Body of Your Letter Include: 

• The Most Important Facts: Include the most important details of your dispute in the body of your letter. For example, if you are the owner of a bike repair shop and a client refuses to pay for repairs done to their bike, you will want to include who in the bike repair shop was responsible for fixing the bike, how the bike was fixed, when did the bike arrive to the shop for repairs, what was wrong with the bike before it was fixed, etc. 

• Any Settlement Offers and the Terms of the Settlement: Outline the terms you are willing to accept that would resolve your dispute. For example, imagine you own a kitchen renovation company, and a client refuses to pay for the work done by your company to their kitchen. In an effort to settle the dispute, you offer the client the chance to pay you in monthly installments rather than a one-time payment for the work your company did to their kitchen.  

• How You Would Like to Receive Payment: Depending on the client and dispute, there are different ways to receive the settlement payment amount. Consider including your mailing address so the client can mail a check to you. 

At the End of Your Letter Include: 

• Other Forms of Settlement You Are Open to: State whether or not you are open to dispute resolution methods like mediation. 

• A Deadline: By including a deadline (usually 14 days), the client is given time to respond while making it clear that if they do not respond within that time, you intend to sue them. 

• Your Signature: At the end of the letter, sign your name. 

Additional Considerations: 

• Keep your demand letter to pay for your records. You can show it to the judge at a small court claims hearing. This is especially handy if your client or client states they didn't receive the letter or didn’t know they owed your money.

• Make sure the tone of your letter is professional. Avoid making any illegal threats, using disparaging language, or souring your chances of a settlement by keeping your tone professional and neutral. 

Sample Demand Letter to Pay Template

Did you know we have a free tool powered by AI that helps you create a demand letter to pay? Check out our demand letter tool.

Below is an example of a demand letter to pay that can be used as a template. This free sample demand letter to pay is for services rendered by a shop owner. Remember, this is only an example of a demand to pay. Use case-specific details when writing your demand letter to pay. 

Landscaping Lads, Inc. 

456 Corporate Ave

El Paso, Texas 79835

September 18, 2023

Jerry Johnson 

654 Client ST

El Paso, Texas 79835

Via USPS Certified Mail

Re: Outstanding Payment for Services Rendered

Dear Jerry, 

I am contacting you demanding payment for $900. This letter is an attempt to resolve this matter outside of court, however, if we cannot come to an agreement, I intend to sue. 

I intend to submit the following case to the court:

I am the business owner of Landscaping Lads, Inc., and offer premium landscaping services for clients looking to maintain and/ or upgrade their residential and commercial landscaping needs. Jerry came to Landscaping Lads, Inc. on May 7, 2023, and requested we plant cacti in various locations on his residential property. I sent Jerry a request for payment of $900, and we planted the requested cacti in their specified locations. It is now September, and Jerry refuses to pay for the services rendered. I have tried to contact Jerry and sent several notices reminding him of the payment I am owed, but Jerry continues to reject paying $900. 

I hope to resolve this matter amicably, and I am open to discussing mediation. You can contact me at [email protected] if you would like to discuss this matter further. Please send me a check written to the name and address written above. 

I am setting a two-week deadline to resolve this matter by October 2, 2023, before I am left with no alternative but to file a lawsuit against you. If this matter were to result in a lawsuit, I intend to seek the payment I am rightfully entitled to, along with additional damages, legal services costs, court costs, and accrued interest. 

Sincerely, 

__________________

Landscaping Lads, Inc.

How to Send a Demand Letter for Payment 

We recommend sending your demand letter to pay via email or mail. However, we believe that sending a letter in the mail may get you taken more seriously. 

Next Steps After Sending a Demand Letter for Payment 

If you sent your client a final demand letter to pay and they have not paid, it may be time to consider taking legal action for non-payment by filing a lawsuit in small claims court or taking your client to collections. 

Consider Sending Your Client to Collections 

If your client has not paid you, even after sending notice in a  demand letter to pay, consider sending your client to collections. 

Here are some frequently asked questions about collections: 

• What is a collections agency? A collections agency is a business that will call and send mail to your client with outstanding payments. 

• How much do collections agencies cost? Some collections agencies charge a set fee or a percentage if they are able to recover your unpaid payments.

• What can debt collection agencies do and not do? The federal Fair Debt Collection Practices Act (FDCPA) limits what collectors can and cannot do. For example, debt collectors cannot use obscene language or threats of violence against the individuals they are trying to collect from. Depending on what state you are in, there may be even more protections and rules than the FDCPA, so make sure you hire a reputable debt collection agency. 

• What to keep in mind when sending your client to a collections agency. (1) You will get less than what you are owed because the collections agency either charges a percentage of what they are able to collect or a set fee. (2) In general, there is a deadline to collect unpaid payments from a client- this deadline is called the statute of limitations, and it varies by state. In California, for example, you have 4 years to collect unpaid payments if your contract with your client was in writing and 2 years to collect unpaid payments if your contract was not in writing.

Consider Suing Your Client in Small Claims Court 

Failure to pay lawsuits are very common lawsuits in small claims. You may want to consider taking your client to small claims court over the outstanding payments instead of consulting a collections agency. 

How much can you sue a client for in small claims? 

• Each state has a different limit that states the maximum you can sue your client for in small claims (the range is between $3,00-$25,000). 

• In general, if your client owes you more than the amount you can sue for, you can still sue for the maximum amount allowed, but you will need to waive any additional amount over the limit.

How much does it cost to take a client to small claims for not paying you? 

• The amount you will pay to file a small claims lawsuit against a client for non-payment of services or goods varies from state to state but generally is between $15- $75. If you cannot afford to pay court fees, you can ask the court if they have fee waivers. 

• You may also need to pay to notify your client that you have sued. This is called serving and ranges from $0- $125. The rules around serving are very specific in each state, so make sure to review them. 
  

Did you know we have a free tool powered by AI that helps you create a demand letter to pay? Check out our demand letter tool.