Letter before Action – Top tips for success
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 LBA’s, as well as creating pre-action protocol steps.
The main goal for sending out this letter is a quick way of procuring payment from the debtor. If your cash flow is affected by bad payers, the whole business can suffer.
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.
Letter Before Action – 10 tips to get 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 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.
6. Ensure Professional Communication
We always recommend that you stay professional, calm and collective throughout all communication with the debtor regardless of how angry this situation may make you.
Communicating in a professional tone will show the severity of the letter and that you are willing to work this out amicably.
7. Notify The Debtor How They Can Contact You Regarding Any Issues
If the debtor has a form of grievance the best way to resolve this is by opening up other avenues of communication, such as phone calls. Providing the debtor with a valid direct contact number can allow both parties to discuss why a payment has not been made.
8. Set A Payment Deadline and Explain The Next Course of Action If No Payment Is Received
A deadline should hopefully motivate the client into responding and resolving the matter.
“If not payment is received within 7 days, we will have no alternative but to pass this matter to a business debt collection agency for recovery”.
9. Advise if Further Action Is Necessary
If further action is necessary, then interest and costs will be applied to the debt. You may also comment that this unpaid debt may affect the client’s credit rating.
This can be a motivator for payment along with the potential for a negative hit on their credit rating.
10. Send The Letter Via Recorded Delivery
As with the email, this proves unequivocal proof they have received the communication.
Letter before Action ignored? – What Should You Do Next?
If the letter before action is unsuccessful, it is time to take more action and follow through on your intentions. A good remedy for this situation is to use professional debt recovery solutions.
Federal Management is the UK’s leader in business debt collection services and operates the industry’s highest recovery rate. Less than 1% of the cases we deal with require costly legal action thus minimising the cost to our clients.
Our multi-award-winning debt recovery services allow us to collect millions of pounds every year. The service we offer promises unrivalled results, a hassle-free and cost-effective recovery.
As well as this, we are the only debt collection agency to be accredited by the Financial Conduct Authority (FCA).
If you or your business are owed money, speak to one of our friendly Debt Collection Experts today for free advice and information.