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Debt Recovery Letter before action – Helpful advice

Last modified: November 20, 2023

Debt Recovery Letter before action - Helpful advice Frontline Collections

Sending a Debt Recovery Letter before action

If you’re a small business that has an issue with an unpaid invoice, you should consider sending a debt recovery letter before action. This type of letter lets your customer know that you are serious about getting paid and can be a useful tool in combatting late payment. In this article, we’ll discuss what a debt recovery letter before action is, why you should send one, and how to go about drafting it. We’ll also provide some tips for making sure your debt recovery efforts are successful!

What is a debt recovery letter before action?

A Debt Recovery letter before action will send out a statement of intent to a customer that has not discharged their invoice in accordance with the creditors terms. Normally, reminders are sent before somebody gets to this point.

It can often solve the need for any further action. It also spells out the message to the customer that enough is enough and the line has been drawn. Sometimes, people and businesses can be shy of doing this. Anybody should expect to be paid what they are owed, it is a simple requirement in life.

Payment reminder

A reminder is usually sent upon which the payment due date has expired. This can be in the form of an email or sometimes a letter. It will details when the payment was due, any reference numbers and a polite request for payment.

If this ignored, it is standard for it to be followed up with a more assertive communication. This will again point out the payment due date and request payment. It should detail any reference numbers or purchase order number.

People should not be afraid to pick up the phone and call the customer to prompt this. People do not always like verbal interactions and chasing payment can be an uncomfortable conversation to have.

When basic efforts fail and payment reminders are ignored, sending a debt recovery letter before action is the next option. This should be essential element of any small businesses credit control. It can reduce the need for third party assistance and ensure you or your business gets paid sooner.

Debt Recovery Letter before Action letter template

There are varying possible templates. This basic Debt Recovery Action letter before action template will help. It will enable somebody to establish the boundaries and put a line in the sand of what is acceptable. Previous late payment reminders have been ignored so authority needs to be established.

The letter before action should be correctly dated and details all aspects of the service or goods supplied. It should also advise of the potential of debt recovery action if necessary. This will often motivate the customer or client to pay. This is an effective tool that can be used by a Small Businesses Debt Collection strategy or if somebody is self employed and not been paid.

It can also be of benefit to public serving businesses like dental practices or veterinary surgeries.

A Debt Recovery Letter before action should be professional and direct in tone. To maximise its effect, it has to make the reader aware of the possible debt recovery action to be taken if the requested sum is not paid.

Basic Example of a Debt Recovery Letter before action:

Dear Sirs,

Re: Outstanding payment due

Our Ref: (insert invoice reference number)

Customer Ref: (insert customer purchase order number, if applicable)

We are writing to you regarding overdue Invoice number 00000 dated 01/01/2022 for the amount of £5,000

Despite previous reminders this sum still remains unpaid. We have previously provided you with the relevant invoices and account statement. 

Unless payment of this sum is received within 7 days of the date of this letter, we will be left with no alternative but to refer this matter to our Debt Recovery Agency to begin action to recover this.

Any further action will include all applicable fees due under the law on late payments as well as  claim for interest from the due date of the invoices, court fees and recovery costs. 

We trust this will not be necessary and look forward to your prompt response.

Yours faithfully

Contact name and company

What if the Debt Recovery letter before action is ignored?

If the debt recovery letter before action notice is ignored then action needs to be taken. Working with a Professional Debt Recovery Agency can ensure your money is recovered if possible. Obviously, it is important to understand that Debt Recovery is not always straight forward. Speaking to a Professional Debt Collection Agency such as Frontline Collections will enlighten you as to the possible options to recover.

A Free assessment is provided by our expert New Business Team. They will establish that the debt is valid and the supporting paperwork is sufficient to start Debt Recovery Action. If you or your Business have not been paid, speak to one of our friendly team today for advice and information on how we can help.

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