Common Mistakes Businesses Make in Letters Before Action

When a customer refuses to pay an invoice, it’s tempting to jump straight into legal action. However, in many cases, there’s an important step that comes first: the Letter Before Action (LBA).

A well-written Letter Before Action can be enough to prompt payment without ever setting foot in a courtroom. It shows the debtor that you’re serious about recovering the money owed while giving them one final opportunity to resolve the matter. Unfortunately, many businesses make avoidable mistakes when sending them. Those mistakes can reduce its effectiveness, damage your legal position, or even cause unnecessary delays if the dispute does end up in court. Here are some of the most common pitfalls, and how to avoid them.

What is a Letter Before Action?

A Letter Before Action (also called a Letter Before Claim) is a formal notice that’s sent to a debtor before legal proceedings start. It’s designed to explain what’s owed, why it’s owed, and what will happen if payment isn’t received within a specified timeframe.

In England and Wales, creditors are generally expected to make reasonable attempts to resolve disputes before things get to this stage. If a resolution can’t be found, then a Letter Before Action is an important part of the process and demonstrates that you’ve given the debtor a fair opportunity to settle the debt.

You might want to consider sending a Letter Before Action when:

• Your normal payment reminders have been ignored
• The debtor has failed to honour agreed payment arrangements
• Communication has broken down
• The debt isn’t genuinely disputed
• You’re prepared to escalate the matter if needed

The timing will vary depending on the circumstances, but waiting indefinitely rarely improves the chances of recovery.

1 – Waiting Too Long

One of the biggest mistakes we see happening time and time again is delaying taking formal action. It’s understandable, since a lot of business owners don’t want to jeopardise their relationships with customers until they have no other choice, but this means that invoices can stay unpaid for months on end.

The reason this is such a big problem is that the older a debt becomes, the harder it can be to recover it. Clients can experience financial difficulties, directors move on, assets disappear, or the company might even go into insolvency. A Letter Before Action should be part of a structured recovery process, rather than becoming a last resort after months of unsuccessful chasing.

2 – Sending an Emotional Letter

We know just how frustrating outstanding invoices can be, especially if the client has been giving you the runaround after you’ve delivered on your end. But a Letter Before Action isn’t the place to express your anger or frustration. Including threats, accusations or emotional language rarely encourage payment, and more often than not they actually undermine the professional impression you want to create. Instead, your letter should be clear, calm, and professional from start to finish.

3 – Leaving Out Key Information

To be effective a Letter Before Action needs to include the right information. It should clearly explain:

• Who the parties are
• The amount outstanding
• Which invoices are still unpaid
• The relevant payment terms
• Any interest or charges being claimed (where applicable)
• The deadline for payment
• What happens next if payment still isn’t received

If you send a letter that’s vague or incomplete, you can create confusion and even further delays.

4 – Making Threats You Can’t/Won’t Follow Through On

We’ve seen some businesses use Letters Before Action to make veiled threats that they have no intention or ability to follow through on. Things like:

‘Legal proceedings will begin immediately.’

Or

‘Bailiffs will be instructed next week.’

If you’re not genuinely prepared to take those steps, then these threats lose credibility almost instantly. Which isn’t ideal! And what’s worse, debtors can often recognise empty threats as what they are, especially if they’ve had similar letters before. So only include actions that you’re genuinely willing and able to pursue.

5 – Ignoring Genuine Disputes

Not every unpaid invoice is a customer just refusing to pay. Sometimes there’s a legitimate dispute over the work done, the quality of the goods supplied or the amount invoiced. If you issue a Letter Before Action before you understand the nature of the dispute, you might find that makes resolving the issue more difficult, not less. If there’s a genuine disagreement, it’s always worth trying to find a resolution before escalating to legal action.

6 – Assuming an LBA Guarantees Payment 

While a Letter Before Action can resolve a lot of debts, it’s certainly not a guarantee. Some debtors will still ignore the correspondence. Some will dispute the claim, and some just won’t have the funds to pay. A Letter Before Action is absolutely an important stage in the recovery process, but it should be part of a wider debt recovery strategy instead of a guaranteed solution.

7 – Handling Complex Cases Alone

Some debts are straightforward, but others involve disputed invoices, dissolved companies, evaded debtors or even multiple jurisdictions. A lot more complicated, and a lot more difficult to manage alone! In these situations, a professional debt recovery specialist can often identify the most effective route forward, helping you avoid any unnecessary delays or costly mistakes. Getting advice early can sometimes prevent a relatively simple debt from becoming a lengthy legal dispute.

At Debtcol, we help businesses across the UK recover outstanding debts professionally and efficiently. From initial collections through to formal recovery action where appropriate, our experienced team can advise on the most effective approach for your circumstances, helping you maximise the chances of recovering the money you’re owed while protecting your commercial interests. If you want to find out more, just get in touch with the team at Debtcol today.