What is a Letter Before Action?
A Letter Before Action (LBA) is a formal letter sent by a creditor (a business) to the debtor (another business) which includes the demand for payment and the terms on which it is to be paid and is in line with the guidelines set in the Practice Direction.
The letter acts as a firm warning of the claim going to court if the amount is not repaid by the date mentioned. A solicitor’s letter is usually quite effective in encouraging an open discussion and can lead to an out of court settlement for your business, which not only saves you time but also helps to maintain business relationships.
Why using MLS can save you time and money
We understand that recovering debt can be a tiring process and that businesses may be cautious when it comes to confronting debtors that have been in partnership with for a long time and asking them for money.
Our experienced team can take the stress of sending a final warning and remind the other side of the consequences of not responding.
We have your best interests in mind, which is why we take a personal approach to each individual case to see what will work for our clients.
We will use the information you provide to write a clear and concise LBA that will encourage open communication and aim for an out of court settlement if possible.
What should you include in an LBA? (This is for guidance only)
- The name and address of your company.
- The name and address of the company that owes you money (ensure all information isup to date).
- Their contact details.
- The terms on how the relationship of both parties will continue e.g. are you carrying onas a partnership?
- The amount owed and the fact that this is overdue.
- If you are claiming any interest then state the amount.
- The date on which the payment is to be made by and the consequences of not doing so.
Benefits of an LBA
- Satisfies the legal requirement and advice set out in the pre-action protocols for commercial debt recovery in the event of court proceedings.
- Helps both parties to communicate effectively
- Shows that you are taking control of the debt and are serious about recovering the remaining balance.
- Reduces the risk of relationships deteriorating by allowing the debtor time to repay the debt and/or talk through possible repayment options with the business.
Click here for our fees for a Letter Before Action and commercial debt support
This article is for information purposes only and does not constitute legal advice. Call us today on 01244 478 730 to book free consultation.