Demand letters, reminders, and the buyer who says nobody told him

On a construction-linked payment plan, the buyer does not pay on dates. He pays on events. A stage of work completes, you raise a demand, and money is due.

That sentence hides the entire collections function of a builder's office, and almost every dispute in it is not about whether the buyer owes the money. It is about whether the demand was properly raised, stated and received.

What follows is the structure. Interest on delay, permitted charges, notice periods and what a regulator requires you to state are set by law and vary by state and by project. Verify the version in force with your own advisor.

What actually triggers a demand#

Three things have to be true before a demand letter should leave your office.

• A stage has completed. Not nearly completed. Not completed on the plan.
• Somebody has certified it. A named person, on a named date, whose certification exists as a document rather than as a conversation in a meeting.
• The trigger matches the buyer's agreement. The stage names in the payment schedule must be the stage names the site uses, or somebody is translating, and translation is where the argument starts.

That third one is the quiet failure. The agreement says "on completion of the slab of the floor on which the said unit is situated". The site talks about the slab it poured last week. Whether those are the same event for a given unit is a question somebody must answer, and if the answer lives in one person's head it leaves when he does.

What the demand must state#

A demand that will not be disputed later says all of this on its face:

1. The unit, unambiguously — tower, floor, number, and the buyer's name as it appears on the allotment.
2. The stage that triggered it, in the same words the agreement uses.
3. The certification — who certified the stage complete, and when.
4. The amount, broken into components rather than one figure: the instalment on the base consideration, each additional charge, and taxes separately.
5. What was already paid, cumulatively, so the buyer can place this demand in the story of his own account.
6. The due date, and how to pay — the account, the reference to quote.

Number five is the one most offices skip, and the one that reduces disputes most. A buyer who can see his running account reconciles it himself. A buyer who sees only a fresh amount rings the office, and now your desk is doing accounting over the phone.

The accounting side of stage-linked money is not obvious, and it is set out in staged payments and accounting.

The three ways the demand itself fails#

Raised late, so everybody defaults at once. The stage completed weeks ago, the demands went out as one batch, and now a whole tower is overdue on the same day. Your ageing report shows a collections crisis that is really an administrative delay, and the buyers who genuinely default are invisible inside the crowd.

Raised on a stage that was not complete. Somebody read the programme instead of the site. The demand goes out, a buyer visits, photographs the slab that does not exist, and puts it in the buyers' group. You will withdraw that demand, and the withdrawal will be quoted back at you against every future demand on that project.

Delivered nowhere. The letter went by email to an address the buyer gave at booking, or landed in a spam folder, or reached the son who forwarded nothing. Months later the buyer says, truthfully as far as he knows, that nobody told him.

Delivery is half the document#

A demand you cannot prove was delivered is, in practice, a demand that was not made. Delivery is part of the record, not an afterthought.

What counts as evidence, in ascending order of usefulness: a system log that a message was sent; a delivery receipt from the channel; a read acknowledgement; a tracked physical dispatch; a reply from the buyer about anything at all, which proves receipt more convincingly than any receipt does.

Two rules follow. Send on more than one channel, because channels fail independently and the buyer's habits are not yours. And keep the addresses current — contact details confirmed at booking are stale by the time later demands go out, which is one reason the relationship needs an owner throughout, as in after the booking comes the longer job.

The reminder ladder#

Before escalation there should be a ladder, and each rung should sound different from the one before.

A courtesy reminder shortly before the due date, which assumes nothing. A reminder on the due date. A firmer one after it, restating the amount and the consequence in neutral language. Then a call from a person, because by this point the reason is usually specific — a disbursement stuck, a stage dispute, a family event — and none of those are visible to an automated message. Only then does formal escalation begin.

The rung that matters most is the one you must not send. An automatic reminder to a buyer who has already paid destroys more goodwill than three missed reminders. He paid, he has the receipt, and your system has just accused him. He will forward it to the group, and everyone behind on payment will now cite your accounting as unreliable.

That risk is not really about reminders. It is about a system that fires messages faster than it reconciles receipts, which is the general disease described in an alert that rings for everything. If the money side cannot be trusted, switch the automatic rungs off until it can. A silent ladder is recoverable; a lying one is not.

The money arrives and nobody knows whose it is#

Then the harder half. A credit lands in the bank with a narration naming the remitter's father, or a company, or nothing useful at all. The buyer's name is not on it. The unit certainly is not.

Left unmatched, that money is simultaneously received and outstanding: the buyer knows he has paid, your ledger says he has not, and the reminder ladder is running against a man who is owed an apology. Matching a credit to the right account is its own discipline, and the mechanics are in matching a bank line.

On our own side we set one rule about this and have not relaxed it. A bank line settles against an open stage only on an exact match to the paise, on the other party's name echoing back in the narration, or on the tax arithmetic working out. Never on being close. An amount that is nearly right is the most dangerous evidence in a reconciliation: right often enough to be trusted, wrong often enough to file a receipt against the wrong person. Where nothing matches, the line stays unmatched and somebody is asked.

What helps is issuing a reference with the demand and insisting it be quoted, banking narrowly so credits arrive already segregated, and treating unmatched receipts as a queue somebody owns daily rather than a month-end problem. Money coming in from buyers and money going out to contractors are separate disciplines, which is the argument in two payment ladders.

The short version#

A demand is a document plus a delivery, and the delivery is the half that gets disputed. State the stage, the certification, the components and the buyer's running position on the face of the letter, and keep evidence that it arrived.

Raise demands as stages complete rather than in batches, never on a stage the site has not certified, and never let an automatic reminder reach somebody who has already paid.