A letter before action is the last written warning before you start a court claim for an unpaid invoice. If you're owed money by an individual or sole trader, the Pre-Action Protocol for Debt Claims applies, with set enclosures and 30 days to reply; if it's a limited company, a clear letter and 14 days is normally enough. Either way, the letter sets out the debt, the interest you're claiming and the date you'll issue a claim.
In this article
The short version
- A letter before action is the last written warning before a court claim.
- For an individual or sole trader, the Pre-Action Protocol for Debt Claims applies: set enclosures and 30 days to reply.
- For a limited company, a clear letter and normally 14 days is enough.
- Itemise the debt, show the interest and compensation, and give a date and a way to pay.
- Skipping it can count against you when the court manages the case and decides costs.
Which rules apply to your debtor
What your letter needs depends on whether the debtor is a person or a company, and plenty of templates don't make the distinction.
| Who owes you | Rules that apply | What goes with the letter | Time to reply |
|---|---|---|---|
| An individual or sole trader | Pre-Action Protocol for Debt Claims | Statement of account, information sheet, reply form, financial statement form | 30 days from the date on the letter |
| A limited company | Practice Direction on Pre-Action Conduct | Copies of the key documents | A reasonable time, normally 14 days in a straightforward case |
The debt protocol covers any business claiming from an individual, and that includes a sole trader trading under their own name. A limited company, or an LLP, falls under the general Practice Direction instead. If you send the full protocol pack to a company, you haven't done anything wrong, but you've given it 30 days where 14 would have done. If you send a two-line letter to a sole trader, you haven't followed the protocol.
What to put in the letter
The content is much the same either way. You're setting out your position and a deadline, so keep it factual.
- The debt: invoice numbers, dates, amounts and what you supplied.
- The agreement behind it: the date of your contract or the order, or for a verbal agreement who agreed it and when.
- The interest and compensation you're claiming. On a business invoice that's 8% above the Bank of England base rate, currently 11.75% a year, plus £40, £70 or £100 of fixed compensation per invoice, and a note that interest is still running.
- What's happened so far: the reminders you've sent and any reply.
- What you want and by when, as a specific sum and a specific date.
- What happens next: you'll issue a court claim without further notice.
- How to resolve it: how to pay, and an invitation to raise any dispute or propose instalments.
Say you're owed £2,400 on an invoice that's now 45 days late. Interest is £2,400 × 11.75% ÷ 365 × 45, which is £34.77, plus £70 of compensation, so the letter claims £2,504.77 and says interest continues at 77p a day.
For an individual or sole trader, the protocol adds a few requirements: say whether interest or charges are still being added, say if the debt has been assigned to someone else, and if you've refused an offer of instalments, explain why.
When to send it and what happens if you skip it
Send it once reminders, a call and a formal notice of the interest position haven't worked, and you're prepared to issue a claim if the deadline passes. A letter before action you don't follow through on tends to teach a customer that your deadlines are negotiable.
The 30 days under the debt protocol run from the date at the top of the letter, so date it the day you send it. Post it, email a copy too if that's how you've been in touch, and keep proof of sending.
You can't be stopped from issuing a claim because you skipped this step, but the court expects it. If you didn't follow the protocol or the Practice Direction, the court can take that into account when it manages the case and when it decides who pays which costs.
Before you send it
Two checks shape how you word the letter.
Start by checking whether the debt is disputed or just unpaid. A query you never answered can be the strongest point a defendant brings to a hearing, so if one was raised, answer it in writing before you send anything else.
Then consider whether the customer can pay. A letter before action to a business in real difficulty usually gets you silence or an offer of instalments. An instalment plan you agree and document is often easier to live with than a judgment you then have to enforce.
There's a commercial question too, because a letter before action usually ends the working relationship. If the customer is otherwise good and this is one bad month, a firm call and a payment plan may serve you better. It also helps if the letter isn't the first time they've heard about interest or a deadline. If your reminders run through Adfin, its collection agents send them on a fixed schedule by email, SMS or WhatsApp and can add statutory interest to overdue business invoices, so by the time you write a letter before action the customer has already watched the amount grow.
Common questions
What is a letter before action? The final written warning before a court claim. It sets out the debt, the interest you're claiming, what you want and by when, and says you'll start proceedings if it isn't resolved.
How long do I have to give them to reply? 30 days from the date on the letter if the debtor is an individual or sole trader. For a company, a reasonable time, which is normally 14 days in a straightforward case.
Does the Pre-Action Protocol for Debt Claims apply to limited companies? No. It applies when a business claims a debt from an individual, including a sole trader. Claims against companies follow the Practice Direction on Pre-Action Conduct.
Do I have to send a reply form and financial statement? Yes, if the debtor is an individual or sole trader: the information sheet, reply form and financial statement form go with the letter. They aren't required for a company.
Can I include late payment interest in a letter before action? Yes. On a business-to-business debt you can claim statutory interest and fixed compensation, and showing the calculation makes it harder to argue with.
What if they ignore the letter? Once the reply period has passed, you can issue a claim. Keep the letter, proof of sending and any reply, because the court will want to see that you followed the pre-action steps.
Sources
- Ministry of Justice - Pre-Action Protocol for Debt Claims (accurate as of October 2026) https://www.justice.gov.uk/courts/procedure-rules/civil/protocol/pre-action-protocol-for-debt-claims
- Ministry of Justice - Practice Direction: Pre-Action Conduct and Protocols (accurate as of October 2026) https://www.justice.gov.uk/courts/procedure-rules/civil/rules/pd_pre-action_conduct
- GOV.UK - Late commercial payments: charging interest on commercial debt (accurate as of October 2026) https://www.gov.uk/late-commercial-payments-interest-debt-recovery/charging-interest-commercial-debt
- Bank of England - The interest rate (Bank Rate) (accurate as of October 2026) https://www.bankofengland.co.uk/monetary-policy/the-interest-rate-bank-rate
- Adfin - Credit control (accurate as of October 2026) https://www.adfin.com/credit-control
