What is a demand letter? Explanation and usage

What is a demand letter? It is a written request to a debtor to pay an outstanding invoice within a specified period. It is the final step before taking collection measures. A demand letter records that you have sent a reminder, gives the debtor a concrete deadline, and warns of the consequences of non-payment — such as collection costs and statutory interest. For consumers, a legally prescribed form applies: the fourteen-day letter.

The short answer

• What: Written request to pay an outstanding invoice within a specified period.
• When: after the payment term of the invoice has expired.
• Goal: to enforce payment and build evidence for potential collection proceedings.
• Consumer: a fourteen-day notice (WIK) is mandatory first before you may charge collection costs.
• Company: collection costs and interest can sometimes be charged immediately if this has been contractually agreed.
• Consequence: in the event of non-payment, a formal demand, notice of default, or collection proceedings will follow.

What exactly is a demand letter?

A demand letter is a payment reminder with teeth. Whereas an initial friendly reminder primarily informs that an invoice remains outstanding, a demand letter sets a concrete deadline and outlines the consequences of non-payment. Legally, it is not an independent mandatory action, but a practical and evidentially important instrument in the debt collection process.

The formal notice marks the moment when you transition from “reminding” to “insisting.” For businesses, this is often a matter of administration; for consumers, the law prescribes a specific form and time limit.

The fourteen-day notice for consumers (WIK)

In the case of a debtor who is a consumer — a private individual not acting in a professional or business capacity — the Collection Costs Act (WIK) and Article 6:96 of the Dutch Civil Code apply. Before you may charge extrajudicial collection costs, you must first send the consumer a formal notice that meets strict requirements:

• The consumer is given a further period of at least 14 days to pay free of charge.
• The time limit only starts running on the day after receipt of the letter (not on the date of dispatch).
• The letter explicitly states the amount of collection costs that will follow if payment is not made within those 14 days.
• For VAT-liable creditors who cannot offset the VAT: state this as well.

If the fourteen-day notice does not meet these requirements, the judge may reject the collection costs. The wording “within 14 days of the date of issue” is a classic mistake — that is too short, because the period must be calculated from receipt. Therefore, use wording such as “within 14 days after this letter has been delivered to you”.

Collection costs and interest

The amount of extrajudicial collection costs for consumers is legally capped via a sliding scale (Decree on Compensation for Extrajudicial Collection Costs):

• 15% on the first €2,500 (minimum €40).
• 10% on the next €2,500.
• 5% on the next €5,000, followed by declining percentages.

In addition to collection costs, you may charge statutory interest. For consumers, the statutory interest applies; between businesses, the (higher) statutory commercial interest applies. Furthermore, for business debtors, you may often charge a fixed amount of at least €40 in collection costs without a reminder, provided this is not contractually excluded.

Demand letter versus formal notice versus notice of default

These three terms are used interchangeably, but have a different emphasis:

• Demand letter: request to pay within a specified period; tone remains professionally neutral. Often the second step after a first reminder.
• Demand: a stricter, compelling notice with a final deadline and a clear warning that legal action will follow otherwise. Essentially a demand with sharper wording.
• Notice of default: a legal act under the law of obligations (Art. 6:82 BW). You formally put the debtor in default and grant a reasonable period. This is often necessary for default to occur, which is a condition for compensation or dissolution.

With an invoice containing a strict payment deadline, default often occurs automatically — in that case, a notice of default is not strictly necessary. In practice, a good reminder or fourteen-day letter often already contains the elements of a notice of default.

Practical example

A webshop supplies goods to a private individual for €1,200. The customer fails to pay the invoice (14-day term). The webshop sends a fourteen-day notice stating: pay within 14 days of receipt, otherwise €180 in collection costs (15% of €1,200) plus statutory interest will follow. If the customer still does not pay, the webshop is entitled to actually claim those costs and transfer the case to a collection agency or legal counsel.

Honest recommendation

You do not need a lawyer for a standard reminder to a business client — a clear letter stating the invoice number, amount, deadline, and announced consequences suffices. You can also send a fourteen-day notice to a consumer yourself, provided you follow the WIK requirements exactly (deadline from receipt, collection amount specified). However, do engage a lawyer in the case of a disputed claim, a large amount, a debtor who refuses or threatens counterclaims, or if you doubt whether your fourteen-day notice is legally correct. An incorrectly worded letter will cost you collection fees later on.

Read more or arrange directly: reminder, draft a reminder and have a reminder drafted.

Frequently Asked Questions