Posted by FedMan on January 9th, 2017

Sending a Business Letter before Action

When a Business has exhausted their credit control processes and an account now becomes a ‘debt’, a Letter before action can come in very handy in terms of procuring payment. A letter before action (also known as a LBA) is a document that sends a clear message to a debtor that time for payment is just about to end. A Letter before Action can be sent before you pass a debt over to a Professional Debt Collection Agency or issue legal proceedings.

Some people think that only a third party can send an LBA such as a Lawyer but this is not the case. We have complied a list of top 10 tips to help people send their own Letter before Action, prior to passing any debts for Debt Collection or Legal activities.

1) – Ensure you use the correct company name and address – May seem very obvious and it is but a simple typo can make it not fit for purpose.

2) – If sending a LBA via email, get a ‘read receipt’ –  This provides proof that they received your LBA and were fully aware of your intended actions.

3) – Use relevant reference numbers – Use any relevant reference numbers to help avoid any confusion or ambiguity. Once again, will prevent the recipient from claiming they thought it related to different invoices etc

4) – Correctly date your LBA -The wrong date on your letter removes any impact or binding stipulations the content may have.

5) – Clearly specify the exact amount outstanding  May sound obvious but it is a critical element of the content of your communication.

6) – Professional communication – As frustrated as non payers may make you, it is highly advisable that your letter has a professional tone.

7) – Notify the debtor how they can contact you regarding any issues – |It maybe the Debtor has some form of grievance i.e a valid dispute so the best way to resolve this is by opening the avenues of communication. Providing them with a direct dial or a mobile telephone number is a great way to do this.

8) – Set a payment deadline and explain the next course of action if no payment is received – This will hopefully motivate them into responding and resolving the matter. A typical line could read, “If no payment is received within 7 days then we will have no alternative but to pass this matter to a Debt Collection Agency for recovery action to commence”

9) – Advise if further action is necessary then interest and costs will be applied to the debt and this unpaid debt may also affect their credit rating – Dependant on whether have employed the late payment of commercial debt act or otherwise, this can be a further motivator for payment along with the potential for a negative hit on their credit rating.

10) – Send the letter recorded delivery – As with the email, this proves unequivocal proof they have received the communication.

If the Letter before Action does not work, then it is time to take a more positive and pragmatic action and follow through on your intentions.

If you are experiencing problems with non paying Business Debtors, take the first step to a low cost professional recovery. Call our friendly New Business Team on 0333 043 4420