Letter Before Action – What Is It?
A “Letter Before Action” (LBA), is a document that is used to send a ‘final notice’ message to a debtor. This normally states that you intend to take steps (such as court action, legal action or charging interest) if payment is not made.
Large and small businesses, sole traders and those that are self-employed can all benefit from using a Letter before Action, as well as creating pre-action protocol steps.
The main goal for sending out a letter before action is basically a quick way of procuring payment from the debtor. If your cash flow is affected by bad payers, the whole business can suffer and a letter before action can really help.
The letters are sent around ten days apart to give the debtor a chance to receive and plan their actions accordingly. A Letter before action is usually the last resort for a company’s internal credit control process. A letter before action is different than a letter before claim.
A Letter before action can be issued prior to turning to a Debt Collection Agency or Legal firm for assistance. It is usually a tactic employed by companies at the end of their own credit control procedure.
If your Letter before action is ignored however, you ought to seek assistance. In this article, our team of experts have compiled a list of the top 10 tips when it comes to sending LBA’s.
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Letter Before Action – 10 tips to get it paid
Pre-action conduct is a good step, and taking credit control measures can help to recover owed money. If you are looking to send out your own LBA, here are our top 10 tips for sending a business letter before action.
1. Ensure You Use The Correct Company Name and Address
There are certain rules which can make the LBA void, and a simple spelling mistake is one example. Always spell-check and confirm all company details and addresses are correct before sending.
2. If You Send Your LBA Via Email, Make Sure You Get A “Read Receipt”
A read receipt, much like on a text message, shows you whether or not the recipient has received your LBA. This will give you and your organisation proof that the client was fully aware of your intended actions if they have read your LBA.
3. Use Relevant Reference Numbers
To avoid any confusion or ambiguity, it is recommended to use any relevant reference numbers throughout all communication with the debtor. This will prevent the recipient of the letter from claiming they thought it was related to a different invoice etc.
4. Make Sure You Correctly Date Your Letter Before Action
If there is an incorrect date on your letter, this may remove any impact or binding stipulations the content may have. This will also confirm to whoever is reading the date this was sent.
5. Clearly Specify The Exact Amount of Outstanding Money
As stated, it is a vital element to any professional letter that you ensure all details on it are correct. This is even more so important when it comes to the amount of money that is owed by the debtor.
Clearly stating how much they owe will make sure they cannot use any excuses. This can include late payment interest under the late payment act.