Solicitor's letter before action explained

Solicitors letter before action

If we’re honest, no one in business genuinely likes chasing unpaid invoices. It’s awkward, and it can take up a considerable amount of time and resources.

Time and resources that could be better utilised elsewhere in the business.

We get it. Unpaid invoices are challenging. They can cause cash flow problems, breakdowns in business relationships, and considerable stress and frustration.

This is where having robust credit control procedures in place is vital.

Helping to provide guidance on the “next steps” in debt collection, these credit control processes involve a number of stages – one of which is sending a solicitor’s letter before action.

This step is a big, and important, part of a formal debt recovery process.

Below, we look at what a solicitor’s letter includes and the benefits this type of communication offers creditors.

What is a solicitor’s letter before action?

A solicitor’s letter before action is a piece of communication that is sent by a creditors solicitor to inform the debtor that you are planning to take legal action against them as they have an outstanding debt with you that has yet to be settled.

The letter before action should include the amount owed and outstanding (including any late payment fees or interest) and information relating to the creditor’s intent to start legal action if the debt remains unpaid.

It should also provide details on how payment can be made and deadlines for payment or acknowledgment of the letter.

The letter’s focus is to show that you are serious about your credit collection processes and to be professional in your approach that this is much more than simply an idle threat.

In most cases, these letters are enough to motivate people to take action and settle their debts.

When to send a solicitor’s letter before taking action

This type of communication is often sent after you have exhausted all other in-house collection procedures, i.e., phone calls, follow-up emails, notices sent in the post, etc.

The debtor should then respond to the letter of claim within a reasonable timeframe; this is typically set at 14 days.

If the debtor continues to choose to ignore the letter, your solicitor or small business debt collection team can apply for a court order to force repayment. However, a high percentage of cases do avoid court proceedings because of the letter before action.

Benefits of sending a solicitor’s letter before action

  • Can speed up payment
  • Avoids court action
  • It shows you’re serious about credit control
  • Communication has more gravitas when it is sent from a solicitor/debt collection agency
  • Suitable for all sizes of businesses across various industries
  • Provides the debtor with one last chance to make payment
  • Payment is still made directly to you, the creditor
  • Cost-effective approach to debt collection.

Small business debt recovery agency

Working with a professional and experienced collections team can help you manage the letter-before-action process effectively and efficiently.

They will also be able to keep a detailed record of all steps taken during the collection process, which is vital if the case is referred to court.

In addition, a letter before action is a crucial document, so it’s vital that you get it right. The wording, information included, etc., has to be correct and appropriate, as it has the potential to be used in court at a later stage if the debt advances that far.

It is advisable that both parties consider alternative dispute resolution strategies before opting for court action.

Information for debtors

If you do receive a letter before action, it’s important that you don’t ignore it. Trust us; the matter will not go away, but it will only get more serious. Instead, look to work with your creditor or the instructed debt collection team to devise a payment solution that works for both parties.

As the debtor, you will also need to accept or reject the claim made against you.

If you agree to the claim, you will need to come to an agreement on how you will repay the debt, i.e. lump sum or in instalments.

If you dispute the claim against you, you will need to explain your reasons and back this up with evidence and justifications, i.e., incomplete or low-quality work.

Debt collection services from Direct Route

At Direct Route, we understand that every business needs to collect on its invoices to ensure the smooth running of its business.

We also know how much unpaid invoices and debt building up can harm your business reputation as well as halt business growth and future opportunities.

That’s why we provide debt recovery services tailored to your business. We work with you and your credit control team to provide the right level of support.

For further information and advice, contact a member of our team today at +447860197476; we’d be happy to help.