The step that recovers most commercial debt — and the one most often done badly enough to be worthless.
A letter before action is the formal, final written demand that comes before a court claim. Done properly it recovers most commercial debt without anything else happening. Done badly it is an expensive way to tell a debtor you are not serious.
This guide is what has to be in one, the two different rulebooks that might apply, and the errors that cost creditors money later.
Answer this before you write a word, because it changes the contents and the deadline.
If the debtor is an individual or a sole trader, the Pre-Action Protocol for Debt Claims applies. It is prescriptive: the letter must state the amount, whether interest or charges are continuing, and details of the agreement; it must enclose an information sheet, a reply form and a financial statement form; and it must give 30 days to respond before a claim may be issued. If the debtor replies asking for documents, the clock effectively pauses while you provide them.
If the debtor is a company or an LLP, that protocol does not apply. The Practice Direction on Pre-Action Conduct and Protocols does, and it is a standard of behaviour rather than a checklist — exchange enough information for each side to understand the other's position, and try to settle without proceedings.
Serving a company-style letter on a sole trader and then issuing in fourteen days is non-compliance with a protocol the court expects to be followed. The usual sanction is on costs — you can win the claim and lose the costs, which on a small debt is most of the value.
Illustrative. The letter also states that interest continues at £3.86 a day, so a debtor who waits another month adds roughly £116 to what they owe.
Before the letter goes, four checks:
All four come off the public record in a few minutes — see checking whether a customer can actually pay.
For a company, the registered office is the address that always works, and it is worth using it even when you have been dealing with a trading address for years. Sending to both costs nothing and removes an argument.
Keep proof of despatch. You do not generally need signed-for delivery — indeed recorded delivery can be counter-productive, because an unsigned item is returned and the debtor can say it never arrived. First class post to the registered office, with the letter also sent by email to the contact you have been dealing with, is the practical belt and braces.
Firm, factual, and free of adjectives. The power of the letter comes from precision, not from anger — a debtor who receives a calm document with correct figures, the right company name and a specific date understands that the next step is real. One that receives an aggrieved essay does not.
Leave out: threats you are not prepared to carry out, anything about the debtor's character, references to reporting them to bodies that have no jurisdiction, and any suggestion that non-payment is a criminal matter. It is not, and saying so undermines everything else in the letter.
Above all, never set a deadline you will not act on. A deadline that passes without consequence teaches the debtor exactly the wrong lesson, and you will not get that credibility back with the same customer.
They pay. Most common outcome. Confirm receipt in writing and close the file.
They engage. They dispute part, or ask for time. Both are progress. Split the debt — get the undisputed part paid now, without prejudice to the rest. See disputed invoices.
Silence. Now decide on numbers: what a claim costs, what is recoverable, and whether the debtor can pay at all. The cost of recovery calculator does the first two.
For an individual or sole trader, 30 days — the protocol requires it and a shorter period is non-compliance. For a company, seven to fourteen days is normal and defensible, provided it is genuinely reasonable in the circumstances. What matters more than the length is that you act on it. A deadline you let slide teaches the debtor that your letters are weather rather than warnings, and the next one will be ignored too. If you are not yet certain you would issue a claim, it is better to give a longer deadline you will honour than a short one you will not. Express it as a calendar date, not as 'within 14 days', so there is nothing to argue about.
It does not have to. Sending a letter before action is not a reserved legal activity, so a business can send its own and so can we. The idea that only a solicitor's letter carries weight is largely folklore. What actually carries weight is whether the letter is correct and whether the next step is real. A debtor who receives a precisely costed demand naming the right legal entity, with a specific date and a credible stated consequence, responds to that — not to the letterhead. For us the next step is a claim issued by RHF Solicitors (SRA no. 324115), who are regulated, so the escalation behind the letter is genuine rather than implied.
Practically, yes. The court expects parties to have tried to resolve matters before issuing proceedings, and a creditor who goes straight to a claim risks costs consequences even on a case they win. There is also a commercial reason that matters more. The great majority of commercial debts are recovered at this stage, without a court fee, without a claim form and without the relationship being formally broken. Skipping it to get to court faster means paying a court fee to achieve something a letter would have achieved for a fraction of the cost. The exception is where limitation is about to expire, in which case protecting the claim comes first.
Good — keep every one of them. Correspondence showing the debt was chased repeatedly and never disputed is genuinely useful evidence, both in persuading the debtor that you are consistent and in answering a dispute invented later. Earlier informal chasing does not spoil a formal letter; if anything it strengthens the picture, because the letter then arrives as the visible change in register rather than as the twelfth email in a series. What does weaken it is a history of deadlines that came and went. If that is your history with this customer, the letter needs to be unambiguous that this one is different, and you need to mean it.
It can, in two specific ways, and both are avoidable. The first is getting the entity wrong — a demand addressed to a company that never contracted with you tells the debtor you have not done your homework, and it can be produced later to argue you acted unreasonably. The second is threatening something unlawful or disproportionate. Threatening a winding-up petition over a genuinely disputed debt is an abuse of process and can end with you paying the debtor's costs. Suggesting non-payment is fraud, or that you will visit their premises, causes similar problems. A letter that stays inside what you can actually and lawfully do is the strongest one. See statutory demands.
The letter-before-action checklist, the interest and compensation rules, and the escalation ladder with what each step costs. One email, no sequence.
Tell us what you are owed and who owes it. You get back what the debt is actually worth once interest and compensation are added, what we would do first, and the fixed fee for doing it.