You have a client or a supplier who is behind on paying money owed to you or your business. What’s the first thing you should do? In most circumstances, we recommend sending a letter before action (LBA), it is a cost effective way to secure payment and is usually the first choice in the debt collection process.

An LBA is a standard letter that is sent to the debtor demanding payment is made of monies owed to you and you will usually receive swift payment from them. We can send these out on your behalf and charge a fixed fee for all standard letters. The letter will request that the debtor makes their payment to you within a specified number of days but if they fail to do this we can start legal action and make a claim on your behalf in the County Court.

In October 2017 a Pre-Action Protocol for Debt Claims came into force, which makes letters before action even more important as sanctions can be imposed by the Court for failure to comply with it.

The Protocol applies to any business (including sole traders and public bodies) claiming debt from an individual, even if that individual is trading as a sole trader. It specifies the conduct the Court will usually expect of parties before Court proceedings are issued, which includes sending an LBA containing the following information:

  • the amount of the debt
  • whether interest or other charges are continuing
  • specified details of agreement
  • details relating to an assignment of the debt
  • an explanation of why an offer of instalments is not acceptable and why a court claim is still being considered
  • details of how the debt can be paid; and
  • the address to which a completed reply form should be sent.

The LBA should also enclose a specified statement of account and details of any interest or administrative or other charges, and it should enclose the Information Sheet, Reply Form and Financial Statement specified by the Protocol.

Once the LBA has been sent, you should then wait for 30 days, after which time court proceedings may be issued, unless the debtor responds within that time period.

Late payment demand

A late payment demand (LPD) is an alternative to a letter before action. With LPD interest and compensation are claimed on each outstanding invoice, and can be highly cost effective and can contribute to your debt recovery and credit control costs. We charge a fixed fee for late payment demands. If the debtor has failed to make payment by the deadline given we can start legal action and make a claim on your behalf in the County Court.

Bespoke letter before action

If you have an outstanding invoice that is in dispute, we can prepare a bespoke letter before action that incorporates a late payment demand. Bespoke letters before action are effective ways in collecting outstanding invoices because they address issues in dispute with the aim of resolving them and avoiding the need to take legal action. Very often a debtor who is presented with a reasoned explanation as to why they owe the debt will then make payment. Debtors are also put on notice that failure to pay will often lead to them becoming liable for additional costs and expenses once proceedings are issued.