Letter before action for an unpaid invoice

Why the letter matters more than the tone of it

Before a debt claim reaches a courtroom, both sides are expected to have tried to settle it. That expectation is written down, and a judge who thinks you skipped it can penalise you on costs or stay the case until you have done it properly. So the letter is not a formality you can improvise over WhatsApp.

The practical effect is bigger than the legal one. Everything you sent before this was a reminder, and a reminder can be ignored at no cost. A letter before action names a date and names what follows it, and most people who have been quietly deprioritising your invoice pay somewhere in that window.

The rules change depending on who owes you the money

This is the part most templates online get wrong, and getting it wrong is what gets a claim delayed. There are two different sets of pre-action rules and the one you follow depends on what the customer is.

If the customer is an individual, which includes a homeowner and also includes a sole trader, the Pre-Action Protocol for Debt Claims applies. It is prescriptive. You have to give them 30 days to respond, and the letter has to be sent with three enclosures: an information sheet, a reply form and a financial statement form. All three are annexed to the protocol itself and are free to download from the Ministry of Justice. A letter sent without them does not comply, however well written it is.

If the customer is a limited company, that protocol does not apply. You fall under the general Practice Direction on Pre-Action Conduct and Protocols instead, which asks only that you give a reasonable period to respond. For a straightforward unpaid invoice with nothing in dispute, 14 days is the period normally treated as reasonable.

If you are not sure which one you are dealing with, check the customer at Companies House before you write. It takes a minute and it is free, and the answer also tells you the registered office address, which is where a limited company should be written to.

What has to be in the letter

Whichever set of rules you are under, the content is broadly the same. The letter needs to leave no room for the reply "I did not know what this was about".

• Your name and address, and theirs, written out in full.
• The date, and the words "letter before action" somewhere obvious.
• What the work was, where it was, and when you finished it.
• The invoice number, the invoice date, the amount and the date it fell due.
• How much is outstanding now, and how many days late it is.
• Any interest and compensation you are claiming, if the customer is a business, with the figures shown.
• How to pay, in full, including the bank details and the reference.
• A deadline: 30 days for an individual or sole trader, normally 14 for a company.
• An invitation to tell you if something is wrong or to propose instalments.
• A clear statement that you intend to issue a county court claim if you do not hear back.

The template

Fill in the square brackets and delete the lines that do not apply to you. Nothing in here needs rewording to sound more serious. Plain and specific reads as more serious than legal-sounding language does, and it is easier to defend if the letter ends up in front of a judge.

[Your business name]
[Your address]
[Your email] · [Your phone]

[Customer name]
[Customer address]

[Date]

LETTER BEFORE ACTION

Dear [customer name],

Unpaid invoice [invoice number]: [amount outstanding]

I carried out [short description of the work] at [job address]. The work was completed on [completion date].

I invoiced you [invoice amount] on [invoice date]. Payment was due by [due date]. The invoice has not been paid and [amount outstanding] is currently outstanding, [number] days after the due date.

I have previously contacted you about this on [dates of earlier reminders]. I have not received payment, or an explanation of why it has not been paid.

[Include this paragraph only if the customer is a business:]
As this is a business-to-business debt, I am also claiming statutory interest under the Late Payment of Commercial Debts (Interest) Act 1998 at the Bank of England base rate plus 8%, currently [interest amount], together with fixed compensation of [£40, £70 or £100] for this invoice. Interest continues to accrue daily until the debt is paid in full.

The total now due is [total]. Please pay it in full by [deadline date] to:

    Account name: [account name]
    Sort code: [sort code]
    Account number: [account number]
    Reference: [invoice number]

If you believe any part of this is wrong, please write to me at the address above by the same date and set out why, enclosing any documents you rely on. If you are able to pay but not in one go, write to me with a proposal and I will consider it.

If I have not received payment, or heard from you, by [deadline date], I intend to issue a claim against you in the county court without further notice. If I do, you may also be ordered to pay the court fee, interest and my costs of the claim.

[Include this line if the customer is an individual or a sole trader:]
This letter is sent under the Pre-Action Protocol for Debt Claims. I enclose the information sheet, reply form and financial statement required by the protocol.

[Include this line instead if the customer is a limited company:]
This letter is sent in accordance with the Practice Direction on Pre-Action Conduct and Protocols.

Yours sincerely,

[Your name]
[Your business name]

How to send it, and why that part matters

Send it by post and by email on the same day. Post is what the rules contemplate and email is what actually gets read. If the customer is a limited company, post it to the registered office listed at Companies House, because that is the address they cannot later say they never checked.

Get free proof of posting at a Post Office counter. It costs nothing and it is the piece of paper that answers "I never received it", which is the single most common response to a letter before action. Recorded delivery sounds better and is often worse, because an unsigned-for letter comes back to you and the customer gets to say it was never delivered.

Keep a copy of exactly what you sent, with the date on it. If you file a claim, you will be asked whether you complied with the pre-action rules, and the answer needs to be a document rather than a memory.

Check the debt is still in time before you spend a stamp

In England, Wales and Northern Ireland you generally have six years from the date the debt became due to bring a claim. In Scotland the period is five years. After that the debt is still owed in principle but it is no longer enforceable through the courts, and the letter has no teeth.

Six years sounds like a lot until you find the invoice at the bottom of a folder. If you are anywhere near the limit, that is the reason to send the letter this week rather than think about it.

What to do with each of the three possible replies

They pay. This is the usual outcome and it is why the letter is worth sending even when you have no intention of ever seeing a courtroom.

They dispute it. Read what they actually say rather than how they say it. A genuine dispute about the work changes your position, because the small claims track will hear both sides and a judge who thinks the complaint had substance can reduce or refuse your claim. If the dispute is invented, reply once, in writing, answering it with the paperwork, and then hold your deadline.

They offer instalments. Take a realistic offer. A payment plan you agree in writing is worth more than a judgment you have to enforce, and enforcement is where most people who win in court discover their real problem. Put the agreement in writing, state that the full balance becomes due again if a payment is missed, and keep the letter on file.

They say nothing. Then the deadline passes and you decide whether to file. Do not send a second letter before action. Sending another one teaches the customer that your deadlines are negotiable, which undoes the only thing the letter was for.

Common questions

Do I need a solicitor to send a letter before action?

No. There is no requirement for a solicitor at any point in a small claim, and on the small claims track you generally cannot recover solicitors' fees from the other side even if you win, so paying for one on a modest invoice usually costs more than it recovers. A letter on your own headed paper carries the same weight in law.

How long should I give them to pay?

Thirty days if the customer is an individual or a sole trader, because the Pre-Action Protocol for Debt Claims requires it. Fourteen days is the period normally treated as reasonable for a limited company on a straightforward undisputed invoice. Giving less than the rules require is the most common reason a claim gets held up.

Can I still add interest after I have sent the letter?

On a business-to-business debt, yes. Statutory interest under the Late Payment of Commercial Debts (Interest) Act 1998 accrues daily until the debt is paid, so the figure in your letter is a snapshot rather than a cap. Say so in the letter, and recalculate it if you go on to file a claim.

Does a letter before action affect the customer's credit file?

No. The letter itself is private between the two of you and appears nowhere. A county court judgment is different: if a claim is issued and they lose or ignore it, the judgment is recorded on the public register and shows on their credit file for six years unless it is paid in full within a month. That consequence is worth stating plainly in the letter, because for a lot of people it is the part that lands.

What if I have already sent lots of reminders?

Reminders are not a letter before action and do not replace it. List their dates in the letter, because a record of repeated contact ignored is useful to you, but you still need to send the formal letter with the deadline and the enclosures before you can file.

Do the maths

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