Short answer: a B2B final demand to a limited company should name the right legal entity, list each unpaid invoice, show the total with statutory interest and fixed compensation worked out clearly, give 14 days to pay or explain any dispute, and say calmly what you will do next. Send it on your letterhead by email and tracked post. Our UK template is unlocked with your name, email and phone below.
If you are reading this, reminders and phone calls have probably not worked. A well-written final demand, often called a letter before action, is the formal step that comes next. It gives the customer one last clear chance to pay, it puts your statutory rights on record, and it shows the court, if it ever gets that far, that you behaved reasonably.
This guide explains what to put in a final demand for a business debt owed by a limited company, LLP or PLC in England and Wales. The template is unlocked through the form on this page; it is not in the public page source. It is a practical draft, not legal advice and not a solicitor’s letter. Debt Collection UK is an introducer to independent partner agencies; we do not collect debts ourselves and we are not authorised by the FCA.
Why is a B2B final demand different from a consumer letter?
Consumer debts carry extra rules. A debt owed by a company is a commercial matter, but the court still expects you to act reasonably before suing. The Practice Direction – Pre-Action Conduct and Protocols asks the claimant to write to the defendant with concise details of the claim, and to allow a reasonable time to reply. In a straightforward case that is 14 days.
If the debtor is an individual, including a sole trader, the Pre-Action Protocol for Debt Claims applies instead. That requires a Letter of Claim with an information sheet and reply form, and 30 days to respond. Do not use our template on a sole trader. See Debt PAP: sole traders vs limited companies.
What should a final demand letter include?
- The correct debtor. The exact registered name and company number from Companies House, addressed to the registered office.
- A clear heading. “Final demand for payment / letter before action” leaves no doubt about what the letter is.
- The invoices. Number, date, due date and amount for each unpaid invoice, and what was supplied.
- Your earlier contact. A brief note of the reminders you sent.
- Statutory additions, worked out. Interest and compensation under the Late Payment Act, shown separately from the principal.
- A deadline. 14 days from the date of the letter, with the actual date written out.
- An invitation to respond. If any part is disputed, ask the company to say why in writing and send any documents it relies on.
- Payment details. Bank details and the reference to use.
- Next steps. What you intend to do if there is no payment or reply, such as instructing a collection agency or issuing a claim.
How do you add late payment interest and compensation?
On a qualifying supply between businesses, the Late Payment of Commercial Debts (Interest) Act 1998 lets you claim:
- Statutory interest at 8% above the reference rate, which is the Bank of England base rate in force on 30 June or 31 December, fixed for the following six months. It is simple interest, running from the day after payment was due.
- Fixed compensation under section 5A: £40 where the debt is under £1,000, £70 for £1,000 to £9,999.99, and £100 for £10,000 or more, per invoice.
- Reasonable section 5A recovery costs beyond the fixed sum, where you actually incur them.
Check your contract first: a clause that provides a substantial alternative remedy can replace the statutory rate. Show the daily interest figure and how you calculated it. Overstating the figures undermines the letter and can count against you later. GOV.UK’s guide to late commercial payments is a useful check.
Why should you never make an empty threat?
A letter that says you “may consider further action” tells a regular late payer that nothing will happen. Say plainly what you will do after the deadline, and then do it. If you are not prepared to instruct an agency or issue a claim, think about what you are prepared to do before you write.
Equally, do not exaggerate. Do not imply that you are a court, that bailiffs will attend, or that the company’s credit rating will be destroyed. Keep the tone calm and factual. A judge may read this letter one day.
How should you send the letter?
Print it on your letterhead and send it to the registered office by a tracked or signed-for postal service, and by email to the contact you have been dealing with. Keep copies and proof of posting. Diarise the deadline.
How do you unlock the template?
Fill in your name, work email and phone in the form on this page. The template appears on screen once you submit, ready to copy onto your letterhead. Each unlock request is emailed to us so we know the template is in use. The template is for limited company, LLP and PLC debtors only and includes the 14-day deadline, the Late Payment Act wording, and an invitation to raise any dispute.
What should you do if the final demand is ignored?
Act when the deadline passes. Sending a second “final” demand teaches the customer that deadlines move. Your realistic options are:
- Instruct a partner agency to take the file, particularly if the company is still trading and the debt is undisputed.
- Issue a county court claim through Money Claim Online. The fee is banded by the amount claimed.
- Consider a statutory demand in limited cases where the debt is clearly undisputed and is £750 or more. This is insolvency pressure, not a collection letter. See statutory demand vs letter before action.
Our guide on what to do when a limited company ignores a final demand goes through each step.
Frequently asked questions
Is a final demand the same as a letter before action?
In practice, yes, for a company debtor. The key is that it meets the Practice Direction: clear details, the figures, and a reasonable time to respond.
How long should I give the company to pay?
14 days is the period the Practice Direction treats as reasonable in a straightforward case. Write the actual date in the letter.
Can I add a collection agency’s fee to the debt?
Section 5A allows reasonable recovery costs beyond the fixed sum on a qualifying debt. Whether a particular fee is recoverable depends on the facts, so do not promise the debtor a specific figure.
Does the template work for a sole trader?
No. Sole traders and individuals need a Debt PAP Letter of Claim.
Want a partner agency to take it from here?
If the deadline has passed and the debtor is a limited company, LLP or PLC, upload the invoice using the claim form at the bottom of this page. We introduce it to an independent partner agency. The fee is a fixed 15% of what is recovered, charged only when you are paid. Recovery is not guaranteed.