Whether someone simply misplaced your bill or is taking advantage of your generous payment time frame, you deserve to be paid for the work you have completed. There is an advantage of being understanding and flexible with some clients when it comes to payment terms. However, if your client, contractor, or associate is too slow in paying, you may need to take additional steps to secure your appropriate income.
Conflict can be uncomfortable, and you may worry about your future job prospects. Being kind yet assertive will often lead to being paid for your skills in a timely manner, and a demand letter is one of the tools you can use to achieve this balance.
After other communication methods of requesting payment for an outstanding debt has failed, you can send a construction demand letter. The tone of this letter is more firm and can often lead to payment being submitted without having to take more drastic steps. A demand letter also attracts more attention that a phone call or email, and lets your client know that you understand your rights to be paid in a timely manner.
Follow these steps to make the most of your demand letter:
- Be professional. Throughout the letter, it may be tempting to be aggressive. However, this will rarely get the results you want. You don’t want to start an argument. You just want to be paid what you are owed and move on to the next job.
- Be specific. Clearly detail how much the client owes you and what work was done. Include any invoices, contracts, other attempts to collect payment, and all relevant information. In most states, a demand letter is required before legal action can be taken. This letter should spell out the legal claim that you have and the additional time and expense it will cost the client if you need to escalate the claim. Also include a deadline for receiving payment. If you are open to creating a payment plan with the client, you can let them know. However, be willing to go to the next legal step if you do not receive payment within the time frame you allowed.
- Know your state’s laws. Nearly all states have a prompt payment law. They allow you to impose penalties, interest or legal fees for bills that are not paid in the time frame stipulated in the contract. You are also entitled to invoke a mechanics lien against the property, and including that you are willing to do so in the demand letter is a good idea.
- Send the letter by certified mail. When you used certified mail to send your demand letter, you eliminate any possibility of the client claiming they did not receive it. You will get a signed form back with all the information about when and how the letter was delivered.
Due to the legal intricacies involved in a demand letter, if you have an attorney, you may want to ask them to draft the letter for you. This way, you know that everything that legally should be included in the letter is. Plus, it sends the message that you are serious about collecting payment and willing to use legal action if necessary.
Make the letter as professional and assertive as possible. Use company letterhead and proofread it well for clarity and accuracy. If you do not receive payment, this letter will serve as the basis of your legal claim to sue the client or start a mechanics lien claim.
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