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A demand letter for payment is a formal request sent to a debtor for an outstanding amount, specifying a due date for payment and serving as a final warning before potential legal action. This video tutorial reviews the essential aspects of payment demand letters and provides information on obtaining a free official template. It emphasizes the significance of issuing such letters, as they alert debtors of possible legal consequences, document the payment request, specify the owed amount, and establish a written record for potential legal disputes. Additionally, the demand letter can offer a reduced settlement as an incentive for prompt payment.