A practical New Zealand guide
How to write a letter of demand in NZ
A letter of demand sets out an overdue account, the amount you are asking for and when you would like it paid. A clear letter gives your customer a chance to pay, explain a dispute or discuss an arrangement before you decide whether further action is appropriate.
What to include in your letter
- Identify the parties and the account. Use your business name and contact details, and address the person or legal entity that owes the invoice. Include the invoice number, date, original due date and a short description of the goods or services.
- Show how you reached the balance. Account for part payments and credits. List any properly supported interest or recovery charges separately, and attach the invoice and relevant statement or agreement.
- Set a clear payment deadline. Choose a reasonable date that allows time for delivery and a response. Check your agreement for any notice requirements rather than assuming the template’s default date fits every account.
- Explain how to pay or respond. Provide payment details and a reference. Ask the customer to contact you if they have already paid, dispute the amount or need to discuss a payment arrangement.
- Describe any next step accurately. Keep the tone professional. Mention only action that is legally available and that you genuinely intend to consider. Keep a copy of the letter, attachments, delivery details and replies.
For practical invoicing and reminder guidance, see Business.govt.nz — Getting paid on time.
Start politely and escalate proportionately
An initial reminder can resolve an administrative oversight. A follow-up can restate the overdue balance and ask for a payment date. A formal demand can make the request more direct while still allowing the customer to raise an issue. Change the wording as the account progresses, and review any response before sending the next letter.
Can you collect interest and recovery costs?
For contractual late-payment interest, first identify the term your customer accepted. Check the rate, when interest starts and how it is calculated. A demand letter does not create an agreed interest term. Only include a charge where you can identify an enforceable contractual or other legal basis for it, and explain the calculation.
If you are unsure what your terms cover, use our free supplier terms checker to look for interest and recovery-cost clauses. It provides an initial overview; a solicitor can advise whether a clause was agreed and is enforceable in your circumstances.
Interest awarded through court proceedings is a separate question. The Interest on Money Claims Act 2016 governs court interest awards, including how contractual provisions affect them. Do not apply a court interest rate to an invoice merely because it is overdue. See Ministry of Justice — Interest on civil debt and New Zealand Legislation — Interest on Money Claims Act 2016.
Check collection fees separately too. Consumer Protection explains that collection fees must have been disclosed in advance and that passing on an agency’s charges depends on the contract. Consumer credit debts can carry additional obligations, so check the rules that apply to your account. See Consumer Protection — Debt collection and repossession.
Keep the letter consistent with the Fair Trading Act
The Fair Trading Act 1986 prohibits misleading or deceptive conduct in trade. In debt collection, do not imply that proceedings have already been filed when they have not, that court action is certain when you do not intend to take it, or that your letter is a court notice. Avoid harassment, coercion and claims to charges or remedies you do not have.
A professional letter should identify your business and explain the account. Its wording and appearance should not suggest it was issued by a court or government agency. See Commerce Commission — Debt collection and New Zealand Legislation — Fair Trading Act 1986.
When the Disputes Tribunal may help
The Disputes Tribunal can hear eligible disputes up to $60,000, including disputed debts and business agreements. It cannot act as a collection agency where the customer agrees they owe the debt but simply does not pay. Check both the nature and value of your claim before referring to the Tribunal as a possible next step.
Read Disputes Tribunal — What the Tribunal can help with for its scope and exclusions. If it is the right forum, follow the official Disputes Tribunal — How to make a claim guidance and retain your agreement, invoices, correspondence and evidence of the dispute. For an admitted unpaid debt or a claim outside its jurisdiction, seek advice about the appropriate recovery process.
Sources and further reading
Official sources checked on 16 October 2026. Rules and procedures can change.
- Business.govt.nz — Getting paid on timeInvoice details, payment reminders and keeping records.
- Disputes Tribunal — What the Tribunal can help withThe $60,000 limit, disputed debts and exclusions.
- Disputes Tribunal — How to make a claimOfficial application guidance and supporting documents.
- Commerce Commission — Debt collectionMisleading representations, harassment and consumer credit obligations.
- New Zealand Legislation — Fair Trading Act 1986Sections 9, 13 and 23 address misleading conduct, false representations and harassment or coercion.
- Ministry of Justice — Interest on civil debtInterest awarded by a court and interest on judgment debts.
- New Zealand Legislation — Interest on Money Claims Act 2016Court interest rules, including the effect of contractual provisions in sections 22 and 23.
- Consumer Protection — Debt collection and repossessionGuidance on collection fees and credit contracts.
This guide provides general information for ordinary overdue invoices. A letter of demand is not a court order or a statutory demand. Obtain legal advice for disputed liability, insolvency or accounts subject to special statutory procedures.