Final demand letter
Also called Letter before action
The last written notice before an overdue debt goes to an agency or legal action, stating the amount due, a deadline and what happens if it isn't paid.
A final demand formally ends the routine collection process. It should be accurate, factual and consistent with earlier correspondence, because it may later be used as evidence.
Courts in many jurisdictions expect to see a formal demand before a claim is filed, so check the local requirements before sending one.
Further reading
Related terms
- Dunning letterA written payment reminder for an overdue invoice: one step in a dunning sequence, from a polite first notice to a final demand.
- Collection agencyA third party that pursues overdue debts on a creditor's behalf, usually for a percentage of what it recovers.
- Write-offRemoving an invoice balance from accounts receivable because it won't be collected, charging it to bad debt expense or the allowance for doubtful accounts.