Every experienced subcontractor has been there: the job is done, the invoice is 60 days past due, and phone calls and emails aren't working. It's time to escalate.
A demand letter is your formal written notice that payment is due — and that you're prepared to take legal action if it isn't received. Done right, a demand letter often resolves payment disputes without litigation. Done wrong, it gets ignored or even hurts your position.
Let me show you how to write one that actually works.
What Is a Demand Letter?
A demand letter (also called a final demand, letter before action, or collection letter) is a formal written document that:
In construction, demand letters serve several purposes:
They create a formal written record of your claim
They demonstrate you're serious about collection
They often trigger insurance involvement on the debtor's side
They may be required before pursuing certain legal remedies
They frequently result in payment without litigation
When to Send a Demand Letter
Timing matters. Send too early, and you damage a relationship over what might be a temporary delay. Send too late, and you may miss legal deadlines or let the debtor dig in.
General guidelines:
30 Days Past Due
First formal reminder (not yet a demand letter). Professional, assumption of oversight.
45-60 Days Past Due
Second notice. More direct. Request for response.
60-90 Days Past Due
Demand letter time. Payment is clearly overdue, and softer approaches haven't worked.
90+ Days Past Due
If the demand letter didn't work, it's time for attorney involvement or other legal action.
Exceptions: If you suspect the debtor is having financial problems, may be about to file bankruptcy, or other time-sensitive factors, move faster.
Essential Elements of a Demand Letter
Every effective demand letter includes these components:
Your Identifying Information
Your company name, address, contact information. Make it clear who's making the demand.
Recipient Information
The correct legal entity name of the debtor. Wrong entity = wrong letter.
Date
The date of the letter. Important for deadline calculations.
Account Summary
The amount owed, the invoice number(s), the original due date(s), and any late fees or interest.
Basis for the Claim
Brief description of the work performed and why payment is due. Reference the contract and any relevant terms.
Payment Deadline
A specific date (not "immediately" or "soon") by which payment must be received.
Consequences Statement
What happens if payment isn't received — legal action, lien filing, collection agency referral, etc.
Response Request
Ask them to contact you if they dispute the amount or want to discuss payment arrangements.
Professional Closing
Keep it businesslike, not emotional.
Sample Demand Letter Template
Here's a template you can adapt:
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[Your Company Letterhead]
[Date]
VIA [CERTIFIED MAIL, RETURN RECEIPT REQUESTED / EMAIL WITH READ RECEIPT]
[Debtor Company Name]
[Address]
Attn: [Name of responsible person if known]
RE: DEMAND FOR PAYMENT
Project: [Project Name]
Contract: [Contract/PO Number]
Amount Due: [$ Amount]
Dear [Name],
This letter serves as formal demand for payment of $[Amount] owed to [Your Company Name] for [description of work performed] at [Project Name].
Pursuant to our [contract/subcontract/purchase order] dated [date], we completed [scope of work] on [completion date]. Invoice #[number] in the amount of $[original amount] was submitted on [invoice date] with payment due on [due date].
As of the date of this letter, payment remains [X] days past due.
PAYMENT DEMANDED: $[Total amount including any interest/fees]
Please remit payment in full no later than [specific date — typically 10-14 days from letter date].
If we do not receive payment by [date], we will pursue all available legal remedies, which may include but are not limited to: filing a mechanics lien against the property, pursuing legal action to recover the debt plus interest, attorney's fees, and collection costs.
If you believe any portion of this amount is not owed, or if you wish to discuss payment arrangements, please contact me immediately at [phone] or [email].
This letter is written without prejudice to any and all rights and remedies available to [Your Company], all of which are expressly reserved.
Sincerely,
[Signature]
[Your Name]
[Your Title]
[Your Company]
---
Sending the Demand Letter
How you send the letter matters as much as what it says:
Certified Mail with Return Receipt
This creates proof of delivery. Essential if you're preserving rights for litigation.
Email with Read Receipt
Faster, and acceptable in many situations. Keep records of the sent email and any receipts.
Both
For important demands, send by both certified mail and email. Cover your bases.
In Person
Sometimes appropriate, especially if you want to discuss. Bring a copy they sign as received.
After You Send the Letter
Track the Timeline
Note when the letter was sent and when payment is due. Don't let the deadline pass without follow-up.
Be Ready to Receive Payment
Have your banking information ready in case they pay immediately. Don't create friction.
Document Responses
Any communication you receive in response should be documented. Write down phone conversations, save emails.
Follow Up on the Deadline
If the deadline passes without payment, follow up within 24-48 hours. "I'm following up on my demand letter dated [X]. I haven't received payment. What are your intentions?"
Escalate as Warned
If you said you'd file a lien or pursue legal action, do it. Empty threats destroy credibility.
Common Mistakes to Avoid
Being Too Aggressive
Threatening violence, making personal attacks, or using abusive language. This can create liability for you.
Being Too Weak
"If you get a chance..." or "Payment would be appreciated..." This is a demand, not a request.
Wrong Legal Entity
Sending the demand to "ABC Construction" when the contract is with "ABC Construction, LLC" can create problems.
Incorrect Amount
Double-check your numbers. Errors in the demand amount create confusion and delay.
Missing Deadlines
Sending a demand letter but failing to track whether payment arrives or follow up if it doesn't.
Threats You Won't Execute
Don't threaten to sue if you won't actually sue. Don't threaten a lien if you've already missed the deadline.
When to Involve an Attorney
Consider getting legal help with your demand letter when:
An attorney's demand letter often gets faster results simply because it signals you're serious. The cost is usually a few hundred dollars and may be worth it for larger amounts.
The SubPaid Approach
SubPaid automates much of this process. The platform tracks payment status, sends escalating reminders on schedule, and can generate demand letters based on your invoice data. When letters are needed, they go out quickly and consistently.
It's like having a collections department that works 24/7 without you having to think about it.
Frequently Asked Questions
Will a demand letter hurt my relationship with the GC?
If payment is 60+ days overdue and they're not responding to calls and emails, the relationship is already strained. A professional demand letter often resets the conversation and leads to resolution.
How long should I give them to pay?
10-14 days is standard. Less for very overdue accounts; more if you're willing to be flexible.
What if they dispute the amount?
That's actually useful information. If they respond with a dispute, you can address it. No response is worse.
Should I charge interest?
If your contract allows late payment interest, include it. If not, you can state you reserve the right to seek interest at the statutory rate.
What if they're in another state?
Same process applies, but be aware of jurisdictional issues for any legal action. Multi-state disputes may need legal guidance.