Sending a Business Letter before Action
Business Letter Before Action – What Is It?
A “Letter Before Action”, or LBA as it is commonly known, is a document that is used to send a clear message to a debtor which states the time for payment to be made is about to end. These can also be used to warn your client of the inevitable consequence of a court claim.
When a business client has exhausted and exceeded the need for their Credit Control Processes and an account now becomes a “debt”, this is when a Letter Before Action can come in handy.
The main goal for sending out this letter is a quick way of procuring payment from the debtor.
In recent years, there has been a large percentage of debts being paid upon receiving a Letter Before Action. This method is the most common way of trying to secure payment before you pass the debt over to a professional Business Debt Collection Agency or issue legal proceedings.
Typically, most Business Debt Collection Agencies usually send out these letters on your behalf. The letters are sent around ten days apart to give the debtor a chance to receive and plan their actions accordingly. However, the letter as mentioned above will instruct the debtors to pay the amount owed directly to you (the creditor) or risk further action.
If these letters are ignored or are ineffective, the matter is moved to the next parts of the process and escalated towards using more direct collection methods.
It is a common stereotype that only a third party, such as a Solicitor, can send a Letter Before Action but this is fortunately not the case.
In this article, our team of experts have compiled a list of the top 10 tips when it comes to people sending their own LBA’s to clients that are not paying and the steps to going about carrying this out.
If you or your accounts team are inexperienced when it comes to the legal elements of the collection of debts, this article will help with the process.
10 Tips for Sending A Business Letter Before Action
If you are looking to send out your own LBA, here are our top 10 tips for sending a business letter before action.
- Ensure You Use The Correct Company Name and Address
This may seem very obvious but there are certain rules which can make the LBA void, and a simple spelling mistake such as this is one example Always spell check and correctly make sure all spellings of company details and addresses are correct before sending.
- 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.
- 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.
- 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 letter which date this was sent which can be helpful if there are disputes regarding the letter never being sent.
- Clearly Specify The Exact Amount of Outstanding Money
As stated in tip 1, 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 specifying how much they owe will make sure they cannot use any excuses of confusion.
- 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 before this is taken any further.
- Notify The Debtor How They Can Contact You Regarding Any Issues
If the debtor has a form of grievance i.e. a valid dispute, the best way to resolve this is by opening up other avenues of communication. Providing the debtor with a valid direct dial or mobile number can allow both parties to have a professional conversation over the phone to discuss why a payment has not been made.
- 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.
A typical line in your LBA could read, “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”.
- 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 further motivator for payment along with the potential for a negative hit on their credit rating which should hopefully make them more likely to pay.
- Send The Letter As Recorded Delivery
As with the email, this proves unequivocal proof they have received the communication.
Business Debt Collection Agency – What Should You Do Next?
If the Letter before Action does not work, then it is time to take more positive and pragmatic action and follow through on your intentions. Our Business Debt Collection specialists are highly experienced in such scenarios and will know the best options for recovery.
At Federal Management, we are the UK’s No1 for Business Debt Collection requirements and operate the industry’s highest recovery rate. We can get straight to the point and send a letter immediately to your debtor to ensure fast payment and ensuring the most effective service possible.
Our multi-award-winning debt collection solution sees us recovery millions of pounds every year on behalf of the businesses we work with. 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), meaning we provide the utmost professional service possible.
If you or your business are owed money, speak to one of our friendly Debt Collection Experts today for free advice and information.
Call our friendly New Business Team on 0333 043 4420