Using a Demand Letter to Benefit Your LLC
Are you familiar with a demand letter and how it can benefit your business? When you form an LLC you have high hopes that every customer pays every bill on time. Sorry, it’s just not that easy. When you form an LLC some of your customers are just not going to pay. But before you head off to court, try a demand letter it may help you get the desired results and save both time and money. Demand letters help LLCs and other businesses resolve 30% of all potential disputes. The beauty of a demand letter is that it is inexpensive and does not have to be complicated, just a short, concise letter demanding payment. In the event the customer does not make payment or you cannot agree on a compromise, you have created additional documentation to take before a judge.
People don’t expect a small business owner to pursue a debt with the same rigor as a large corporation. So, unfortunately they may disregard your polite attempts to collect payment. A demand letter from your LLC detailing why they owe and what they owe and the legal alternative if they don’t pay demonstrates that you are serious and willing to go to court. Often times the thought of having to go in front of the judge and publicly face their debt is enough to make them pay. They want to avoid court as much as you do.
A well written letter is the best way to represent your LLC. In order for the demand letter to be effective there are a few key items you want to include:
- A history of the debt. Even though the customer should know why they owe and the attempts you have already made to collect, in the event you do have to go to court it provides a detailed history for the judge.
- Be sure to state the specific results you are looking for. For example, “$250.00 must be paid in full on or before July 1st”.
- Look and sound professional. Your demand letter is a reflection of your LLC. Type the letter on company letter head. Avoid disparaging remarks and keep the content business related. Send a copy to the client and keep a copy for your records.
- Conclude your letter by clearly stating that you intend to take legal action if your demand is not met. For example, “If the full amount, $250 is not received by July 1st, I will immediately file a claim in court”.
In a perfect world, you deliver a great product and your customer delivers a prompt payment. Until then, try using a demand letter and spend your precious time running your LLC not running back and forth to court.
HOURS OF OPERATION
9:00a.m to 5:00p.m. CT
Monday - Friday
Let one of our specialists answer your questions!