When to send one
Send it once your normal reminders have failed and you're prepared to take the next step. It is usually the last letter before court or other formal action, such as a statutory demand.
What it must include
- Your details and the debtor's correct legal name and address
- The invoice numbers, dates and amount outstanding
- What the debt is for, and that it is undisputed or how any dispute was handled
- Any statutory interest and compensation claimed (calculate it here)
- A clear deadline and how to pay
- That you may start court proceedings without further notice if it isn't paid
- For individuals and sole traders: the Pre-Action Protocol information sheet and reply form
Template
[Your business name and address] [Date] [Debtor legal name and address] LETTER BEFORE ACTION Invoice(s): [numbers and dates] Amount outstanding: £[amount] We supplied [goods/services] under [contract/order reference]. The invoice(s) above were due on [date] and remain unpaid despite our reminders of [dates]. We also claim statutory interest under the Late Payment of Commercial Debts (Interest) Act 1998 at [rate]% a year (£[daily amount] per day) and fixed compensation of £[40/70/100]. Please pay £[total] by [deadline] to [payment details]. If you dispute any of this, please tell us in writing by that date with your reasons. If we do not receive payment or a response by then, we may start court proceedings without further notice, which may increase the costs you are liable for. [Name, position]
What happens next
Most debts are settled at this stage. If the deadline passes, the options are a county court claim (including Money Claim Online), a statutory demand, or passing the debt to a collection agency to continue pre-legal recovery.