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A demand letter for payment is a formal notice that requests a debtor to pay an owed amount by a specified date. It serves as a final warning before potential legal action, commonly used by collectors. This video tutorial provides essential information about payment demand letters and includes access to a free official template. The importance of sending a demand letter lies in its ability to alert the debtor about possible legal ramifications, document the reason for the payment demand, specify the exact amount owed, and express the payment request in writing for future legal reference. Additionally, it can offer a reduced settlement as an incentive for prompt payment.