You may have seen the term Letter Before Action (otherwise known as LBA) before, and wondered what it means. Or maybe you’ve received an LBA, or have been advised to send one out? In this itsettled explainer we’ll guide you through exactly what an LBA is, and how to utilise one within your business.

What is a LBA/Letter Before Action?

A letter before action is the first formal step in the debt collection process. You send a Letter before action as a precursor to taking legal action against your client who has not paid their invoice or invoices. 

When would you use a LBA - Letter Before Action?

You would use a Letter Before Action when you have tried to contact a client and receive payment for an invoice, but you haven’t succeeded in getting paid. A letter before action lays out your intentions for how you’re going to proceed with the debt collection, and states that you are going to take legal action against your client. 

What does a LBA (Letter Before Action) include?  

A letter before action includes;

• Your name and address
• A summary of what’s happened
• What you want the business to do about it
• How much money you want - for example the amount due plus any additional fees or charges - and how you’ve calculated that amount
• A deadline for reply - this is usually 14 days
• A statement that you’ll start court proceedings if you don’t get a reply within the specified time frame. 

What benefits does using an LBA (Letter Before Action) provide?

The main benefit of a LBA is that it marks the beginning of the legal proceedings you are going to take a client. Sometimes this letter is enough to get your client to pay, as they don’t want a small claim to be taken out against them. 

If the client doesn’t pay, however, a LBA provides security that you have pre-warned a client before taking them to a small claims court - this letter is a legal requirement. If you feel like you’ve tried everything and still haven’t received payment, then a Letter Before Action is the best next step. 

How itsettled uses LBA’s.

At itsettled, our credit management and debt recovery software is built on nearly three decade of experience within the credit management industry. Our software automatically chases your invoices, and gets you paid quicker and gives you a sustained cashflow boost. 

We use letters before action towards the end of the process, but the majority of invoices uploaded to our platform don’t reach that step, as many of our customers begin to be paid on time - or even earlier - after using itsettled. 

Learn more about how itsettled works here. 

Sign up for a free seven day trial of itsettled today.