What is a letter before action, and how do you use them?
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.
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.
A letter before action includes;
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.
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.
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