Final Demand Letter

Use our template Final Demand Letter to warn a customer with a very overdue debt that legal action will be commenced as the next stage if the overdue account is not settled within a specified period of time.

How long to give the Debtor?

We used to say, generally, that a final demand should give the debtor between 7 and 14 days. However, the Court’s Pre-Action Protocol for Money Claims says a business creditor should write to the debtor by post and give them 30 days to pay or respond.

This template letter is for use in the UK, as it refers to UK legislation. In this instance, this is the Late Payment of Commercial Debts Regulations 2013. NB the draft does not comply with the above Pre-Action Protocol.

The Late Payment of Commercial Debts Regulations 2013

Under this legislation, you are entitled to claim interest on the debt. It is useful to mention this in your final demand letter. The interest runs from the date at which payment of the overdue invoice or account became due. So if your payment terms are 30 days from the date of the invoice, then interest arises on the 31st day after the date of the invoice.

You can also claim fixed amounts as compensation for having to bring the claim. This amount is between £40 and £100 per overdue invoice, depending on the size of the invoice. Our final demand letter template refers to your right to claim this.

Using the Final Demand Letter template

Send this letter as the penultimate stage in your credit control process for securing the payment of late payments.

As a final demand letter, we have worded the letter in a very firm and formal manner. This is why we do not recommend it for use as the initial stage of asking for payment when an invoice becomes overdue. You need a more gentle tone at that initial stage – see our Invoice Overdue Letter template.

You should send this final demand letter as the very last action before issuing legal proceedings to recover the money the customer owes to your business. If you do not receive payment quickly after issuing such a letter, then move on to suing shortly afterwards. Do not leave it too much longer after that before you issue proceedings. Further delays are not likely to assist your chances of a recovering the debt.

For the full guide on how to use our suite of debt collection templates, please click here.