The formal demand that precedes a claim — and the step at which most commercial debt is actually recovered.
A letter before action is the formal, final demand that precedes a court claim. It is the single most effective step in commercial debt recovery, and it is also the step most often done badly enough to be worthless.
It works because of what it signals rather than what it threatens. A debtor who has ignored eleven emails is not confused about whether they owe you money. They have made a judgement that nothing will happen. The letter's job is to make that judgement obviously wrong — which requires it to be precise, correctly addressed, correctly costed, and visibly the last thing before proceedings.
Two different regimes apply, and which one you are in depends on who the debtor is.
The Pre-Action Protocol for Debt Claims applies, and it is prescriptive. The letter of claim must set out the amount, whether interest or other charges are continuing, and where the debt arises from an oral or written agreement, details of it. It must be accompanied by an information sheet, a reply form and a financial statement form, and it must offer to provide a copy of the underlying documents. The debtor gets 30 days to reply before a claim may be issued, and if they reply asking for documents, the clock effectively pauses while you provide them.
The Debt Claims 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: the parties are expected to exchange enough information to understand each other's position and to try to settle without proceedings. In practice that means a letter that states the debt, the basis of it, the interest and compensation claimed, a reasonable deadline, and an invitation to say now if any of it is disputed.
A creditor who serves a company-style letter on a sole trader and then issues in 14 days has not complied 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. Getting the classification right is the first thing we check.
Most letters before action that businesses send themselves claim the invoice and nothing else. That leaves money on the table and it weakens the letter, because a debt that grows is a debt with a reason to deal with it now.
Statutory interest on a late commercial debt runs at 8.0% over the Bank of England base rate. The base rate is fixed for six months at a time for this purpose: the rate in force on 31 December governs debts where interest starts in the first half of the year, and the rate on 30 June governs the second half. With base rate at 3.75%, the rate for debts where interest starts 1 July to 31 December 2026 is 11.75%.
On top of the interest, a fixed sum attaches to each late invoice:
And if your reasonable costs of recovering the debt exceed the fixed sum, you may claim the difference on top. Late Payment of Commercial Debts (Interest) Act 1998, s.5A.
None of this needs to be in your terms and conditions. It is implied into business-to-business supply contracts by statute, and a term that tries to exclude it is open to challenge. It can be claimed on invoices that are already long overdue.
This sounds administrative and it is where a surprising proportion of failed recoveries begin. The checks worth doing before the letter goes:
Three outcomes, and each has a next step decided before the letter goes rather than after.
They pay. Most common. Confirm receipt, close the file.
They engage. They dispute part of it, or they ask for time. Both are progress. A part-disputed debt can usually be split, with the undisputed part paid now and the argument narrowed to what is genuinely in issue.
Silence. The deadline passes and nothing arrives. That is the point at which the decision to issue a claim gets made — on the numbers, with the court fee and the realistic prospects of enforcement in front of you.
Not quite, and the difference is worth being straight about. A solicitor's letter comes from a firm regulated by the SRA. Ours comes from Buzz Legal Ltd, which is not. What matters to the debtor is whether the letter is correct and whether the next step is real — and if the next step is a claim, it is issued by RHF Solicitors, who are regulated.
If the debtor is an individual or a sole trader, the protocol requires 30 days and you should give it. If the debtor is a company, a shorter deadline is normal and defensible — commonly seven to fourteen days — provided it is genuinely reasonable in the circumstances. What you should not do is set a deadline and then not act on it, which teaches the debtor exactly the wrong lesson.
Yes, and for a small, simple debt against a company that is a perfectly sensible thing to do. The reasons people bring one to us are that they want the interest and compensation calculated correctly, they are not certain which protocol applies, they want the entity checked, or they want it to be obvious that the next letter is a claim form. Our free interest calculator does the arithmetic whether or not you instruct us.
Then it stops being a debt recovery job and becomes a dispute, and the honest advice changes. Issuing a claim on a genuinely disputed debt is expensive and risky. We would look at whether the dispute is real or tactical, whether the debt can be split so the undisputed part is paid now, and what the evidence actually shows. See disputed invoices.
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.