Letter before action template for an unpaid trade invoice, and the 30-day wait that follows

A letter before action is the last letter you send before a county court claim. If the customer is a householder or a sole trader, it has rules: the Pre-Action Protocol for Debt Claims sets out what the letter must say, what goes in the envelope with it, and how long you then wait. Below is a letter you can copy. The protocol calls it a letter of claim.

Free tool

Letter before action maker for an unpaid trade invoice

Fill in the invoice and how the job was agreed. The letter gives the customer 30 days from its date, as the debt protocol requires for a householder or sole trader.

Which letterJob agreed in person or by phoneJob agreed in a written quote Your business name, address, phone and emailHarlow Electrical, 4 Mill Lane, Stafford ST16 2AB 01785 000000, accounts@harlowelectrical.example Customer's full name Invoice number Invoice date Date payment was due Amount owed The work and the address Date the job was agreed Interest a day at 8% a yearThe amount owed × 0.08 ÷ 365. On £2,400 it is £0.53. How to pay

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• Post it on the day it is dated or the day after, with the statement of account, the Annex 1 information sheet and reply form, and the Annex 2 financial statement form.
• This wording is for a householder or a sole trader. For a limited company leave out the three forms, add statutory interest and the fixed fee, and give 14 days.
• If the customer says the work is wrong, deal with that complaint first or take advice before you send this.

The rule this rests on: Pre-Action Protocol for Debt Claims, paragraph 3. A draft to check and adapt, not legal advice.

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Which rules apply to your customer

In England and Wales the protocol applies to "any business (including sole traders and public bodies) claiming payment of a debt from an individual (including a sole trader)".

One limit: the protocol does not apply where the debt is covered by another protocol "such as Construction and Engineering". If the customer says the work is wrong, you have a dispute about the work as well as a debt. Deal with the complaint first, or take advice before you write.

What the letter must say

Paragraph 3.1 lists the contents:

1. The amount of the debt.
2. Whether interest or other charges are still being added.
3. If the job was agreed by word of mouth: who made the agreement, what was agreed (as near as you can to the words used), and when and where. Jobs agreed on a doorstep or by phone need this one.
4. If the job was agreed in writing: the date of the agreement, who the parties are, and that the customer can ask you for a copy.
5. How to pay, and how to get in touch to talk about other ways of paying.
6. The address the reply form should be sent to.

If you have turned down an offer of instalments, the letter must also say why.

What goes in the envelope

• The letter, dated near the top of the first page.
• An up-to-date statement of account. Usually that is the invoice plus any payments, interest or charges.
• The Information Sheet and Reply Form from Annex 1 of the protocol.
• The Financial Statement form from Annex 2.

Both annexes are in the protocol, which is free on justice.gov.uk.

Then post it. The protocol says the letter "should be sent by post", on the day it is dated or the day after.

The letter

[Your business name, address, phone and email]

[Date]

Dear [customer's full name],

Letter of claim: invoice [number], £[amount]

Invoice [number], dated [date], for [short description of the work] at [address] has not been paid. It was due on [date]. The amount owed is £[amount].

The work was agreed between you and me in person at the property on [date], when you accepted my price of £[amount] for [the work]. [Or: The work was agreed in my written quote dated [date], which you accepted on [date]. You can ask me for a copy.]

No interest or charges have been added so far. If I have to make a court claim, I will ask the court to add interest at 8% a year, which is [daily amount] a day on this debt, and the court fee.

You can pay by bank transfer to [details]. If you cannot pay in full, phone me on [number] or email [address] and we can talk about paying in instalments.

I enclose a statement of account, an information sheet, a reply form and a financial statement form. Please send the reply form to the address above within 30 days of the date of this letter. If I have not heard from you by [date, 30 days ahead], I may start a court claim.

Yours sincerely, [Name]

The sums on a £2,400 invoice

GOV.UK's guide to court claims says that for debts other than late commercial payments "the rate is usually 8%".

On £2,400 a year's interest is £192, which is about 53p a day. After 45 days that is £23.67 (£192 × 45 ÷ 365). A claim of £2,423.67 falls in the £1,500.01 to £3,000 band, so the court fee is £115.

A business customer owes statutory interest and a fixed fee instead. Our late payment interest calculator works out the figure.

After you post it

If the customer is a limited company

The debt protocol does not apply, so there are no forms to enclose and no 30-day wait. The Practice Direction on Pre-Action Conduct asks for a letter with "concise details of the claim": the basis of the claim, a summary of the facts, what you want, and how the amount is calculated. Use the letter above without the three forms, add the statutory interest and the fixed fee, and give a date 14 days ahead.

What skipping the protocol can cost

Under the Practice Direction, a court can order the party at fault to pay costs. If that party is a claimant who has won, the court can take away interest for a period or award it at a lower rate. The protocol says a court "is not likely to be concerned with minor or technical infringements", which is no reason to leave out the forms.

Our guide to what to do when a customer won't pay covers the whole route and the other court fee bands. The three chasing messages for builders come before this letter.

This is general information, not legal advice. For a large debt, or one where the customer disputes the work, speak to a solicitor or your trade body's legal helpline.