Letter before action for business debts: what to include

A letter before action is the formal written warning you send before issuing a county court claim for an unpaid commercial invoice. It is not a court form and it is not a statutory demand.

Debt Collection UK (a trading style of PASECOM GROUP LTD) introduces B2B files to independent partner agencies. We are not solicitors and we do not conduct litigation. PASECOM GROUP LTD was incorporated in April 2026.

What is a letter before action (LBA)?

In commercial recovery, a letter before action (LBA) sets out the claim, the sum, how it is calculated, and that court proceedings may follow if the debtor does not pay or engage by a stated date.

The Civil Procedure Rules do not use that name. Practice Direction – Pre-Action Conduct and Protocols requires the claimant, where no specific protocol applies, to write with concise details of the claim. The Pre-Action Protocol for Debt Claims (Debt PAP) calls the equivalent a “Letter of Claim” when the debtor is an individual, including a sole trader.

An LBA does not freeze a bank account or register a CCJ. The Practice Direction expects the parties to exchange enough information to try to settle without proceedings. A reminder is not enough. The court looks at substance: did you set out the claim, give a genuine chance to respond, and behave proportionately?

Letter before action vs Letter of Claim (Debt PAP): sole traders vs limited companies

The Debt PAP applies when a business claims a debt from an individual, including a sole trader. It does not apply to business-to-business debts unless the debtor is a sole trader. Company versus company sits outside it.

Where the Debt PAP applies, send a Letter of Claim: dated, posted, with the Information Sheet, Reply Form and a financial statement, on the 30-day timetable below. Calling it an “LBA” does not relax those rules.

Where the debtor is a limited company or LLP, there is no Debt PAP. Follow the Practice Direction: a concise letter of claim, a reasonable time to reply, and disclosure of key documents.

Do not send a seven-day “final demand” to a sole trader and treat it as Debt PAP compliance. Do not enclose the consumer Reply Form and wait 30 days as if a limited company were an individual. This article is about England and Wales. GOV.UK notes a different process in Scotland and Northern Ireland.

What to include in a letter before action for business debts

If the debtor is a limited company or LLP

Keep the letter proportionate (Practice Direction, paragraph 4). Paragraph 6(a) says it should include the basis of the claim, a summary of the facts, what you want, and if money, how the amount is calculated. In practice:

• full legal names and the debtor’s registered office
• what was supplied, when, and that the sum remains unpaid
• a stated total by a stated date, or a written dispute
• invoice numbers, dates, amounts, due dates, sums paid and the outstanding principal
• any statutory interest and fixed compensation you can actually claim, with the rate and running total
• how to pay and where to send a dispute
• that you may issue a county court claim if the deadline passes without payment or a substantive reply
• copies, or an offer of copies, of the invoice, purchase order, proof of delivery or completion, and terms.

A knowingly false statement in a pre-action letter may be contempt of court (Practice Direction, paragraph 2). Do not inflate the debt.

If the debtor is a sole trader or other individual

Use the Debt PAP Letter of Claim. Paragraph 3.1 requires the amount of the debt; whether interest or other charges are continuing; details of the oral or written agreement; assignment details if relevant; why any instalments are not acceptable; how to pay and how to discuss options; the address for the Reply Form; an up-to-date statement of account (or enough detail of interest and charges to bring the last statement up to date); and the protocol Information Sheet and Reply Form (Annex 1) plus a Financial Statement (Annex 2).

Date the letter near the top of the first page and post it that day or the next. Send it by post (you may also email it). If the debtor has explicitly asked you not to use post, use those details — a term in your standard conditions is not an explicit request.

Letter before action timescales

There is no single statutory “LBA waiting period”.

Company or LLP (Practice Direction, paragraph 6(b)). Allow a reasonable time to respond: 14 days in a straightforward case, and no more than three months in a very complex one.

Sole trader or other individual (Debt PAP). If there is no reply within 30 days of the date at the top of the Letter of Claim, the creditor may start proceedings, allowing for a reply posted towards the end of that period (paragraph 3.4). If the debtor returns the Reply Form and is seeking debt advice, do not start proceedings less than 30 days from receipt of the completed Reply Form or 30 days from providing any documents they requested, whichever is later (paragraph 4.2). If they responded but you still cannot agree, give at least 14 days’ notice of your intention to start proceedings, unless there are exceptional circumstances such as limitation about to expire (paragraph 8.2).

The Practice Direction and the protocols do not extend limitation. If a limitation date is close, paragraph 17 says you may issue to protect the claim and then apply for a stay while you complete the pre-action steps.

What happens if a letter before action is ignored?

If a compliant letter is ignored, the court path is a county court claim for money. GOV.UK explains that you can apply to a county court to claim money you are owed by a person or business, online or by post, and that mediation can be quicker and cheaper than going to court. The Practice Direction likewise treats litigation as a last resort; silence on ADR can lead to additional costs.

Issuing is not payment. HMCTS guidance states that if the defendant does not reply, a judgment may be entered against them. Where particulars of claim are served with the claim form, they must reply within 14 days of the date of service. None of that starts when you send the LBA. The court does not collect the money for you.

Skip a proper letter, or send one that does not set out the claim, and the court can take non-compliance into account on case management and costs (Practice Direction, paragraphs 13 to 16).

A partner debt collection agency instructed through this site can send a compliant letter and advise on a claim. You decide whether to litigate. Recovery is not guaranteed. If reminders have already failed, pass the unpaid invoice via the secure claim form. We introduce the file; we do not issue proceedings.

Frequently asked questions

Is a letter before action a legal requirement?
There is no form titled “letter before action”. Before you start a claim in England and Wales, the court expects the relevant protocol or the Practice Direction to have been followed.

Does the Debt PAP apply to an unpaid invoice against a limited company?
No. It does not apply to business-to-business debts unless the debtor is a sole trader. Company-to-company claims follow the Practice Direction.

How long after a letter before action can I issue a claim?
14 days for a straightforward company debt (Practice Direction). Under the Debt PAP, 30 days from the date of the Letter of Claim, plus any extra 30 days if they replied and sought advice or documents, then 14 days’ notice if you still cannot agree — unless limitation is about to expire.

Can I add statutory interest and the £40, £70 or £100 compensation?
Yes, on a qualifying late commercial debt if you can show the calculation. Set the figures out in the letter. See statutory interest on late commercial debts. Adding interest does not compel payment.

Can Debt Collection UK send the letter before action?
A partner agency can. We introduce B2B files; we are not solicitors and we do not conduct litigation. Instruct via the secure form on this site.