As mentioned above, sending a Letter of Demand is not a prerequisite for commencing legal action against the recipient. If the latter disputes your demands in general or partially, the LOD serves little to no purpose at all. However, if the demands are undisputed, the Letter of Demand may force the recipient to satisfy them promptly in order to avoid huge litigation costs.
LODs are also a useful tool in contractual relationships. If you anticipate that the debtor will breech an agreement or contract you can also send them an LOD.
Make sure to keep a copy of the LOD and, if possible, to obtain a prove that the recipient has received the document.