Letter before action: what freelancers need to know

What a letter before action is

A letter before action (also called a letter before claim or letter of claim) is a formal notice that you intend to start court proceedings unless the debt is paid. It is different from a reminder: it is precise, complete and written so that a judge could read it later and see that you gave the debtor every fair chance.

Its job is twofold. Practically, it gets results: many clients pay as soon as the tone turns formal. Procedurally, it shows that you followed the pre-action rules, which matters if you do end up in court.

Which rules apply (England and Wales)

Your client is a company or LLP

The Practice Direction on Pre-Action Conduct applies. It asks both sides to exchange enough information to understand the claim and to try to settle it. Your letter should set out the claim concisely and give a reasonable time to reply: normally 14 days for a simple unpaid invoice.

Your client is an individual, including a sole trader

The Pre-Action Protocol for Debt Claims applies whenever a business claims a debt from an individual. Your letter (the protocol calls it a Letter of Claim) must include specific information and enclosures, and you must allow 30 days for a reply before starting a claim. The enclosures are an information sheet, a reply form and a financial statement form, all available from the protocol's annex on the GOV.UK Justice website.

What to include

• A clear heading: “Letter before action” (or “Letter of claim”).
• Your full business name and address, and the client's correct legal name and address.
• What the debt is for: the agreement, the work delivered, and the invoice numbers, dates and amounts.
• Any payments already received, and the balance outstanding.
• Statutory interest and fixed compensation, if you're claiming them, with the rate, the daily amount and how you calculated it. The calculator gives you a breakdown you can copy.
• A summary of the reminders you've already sent, with dates.
• A specific deadline (a date, not “14 days”) and exactly how to pay.
• What you'll do if you aren't paid: issue a court claim for the debt, interest, compensation and costs.
• An invitation to get in touch if they dispute the debt or want to discuss a payment plan.

A sample outline

Adapt this to your situation. If your client is an individual, use the Debt Claims protocol's required wording and enclosures instead.

Sending it

• Use the client's registered or business address and send it by post with proof of postage, ideally tracked. Email it as well so it's seen quickly.
• Address it to someone with authority: a director, the finance contact or the business owner.
• Keep copies of the letter, proof of sending and every reminder before it. A judge will want to see them.

What happens next

Most debts are paid, or a payment plan is agreed, at this stage. If the deadline passes without payment:

1. Issue a claim. In England and Wales, Money Claim Online lets you claim a fixed sum up to £100,000 online. Claims up to £10,000 are normally dealt with on the small claims track, where each side usually pays its own legal costs.
2. Pay the court fee, which depends on the amount claimed. It is usually added to what the debtor owes if you win.
3. If the client doesn't respond, you can ask for judgment by default. If they defend, the court will give directions, often including mediation.
4. Enforce the judgment if it still isn't paid, for example through enforcement agents or an attachment of earnings.

Weigh up cost, time and the client's ability to pay before you start. A judgment against a business with no money is hard to collect.

Scotland, Northern Ireland and the EU

Scotland and Northern Ireland have their own courts and procedures. In Scotland, claims up to £5,000 usually use the simple procedure in the sheriff court. A clear final demand before court is good practice in both.

In the EU, most countries expect a formal notice before court, such as a mise en demeure in France or a Mahnung in Germany. For cross-border debts, the European Order for Payment and the European Small Claims Procedure (up to €5,000) can help. See our EU Late Payment Directive guide.

Mistakes to avoid

• Overstating the debt. Only claim what you're entitled to. Inflated figures undermine your credibility and can cost you at court.
• Threats you won't carry out. If you say you'll issue a claim on a date, be ready to.
• Harassment. Don't contact the client excessively, publicly shame them or contact third parties about the debt.
• Ignoring a genuine dispute. If the client raises a real problem with the work, engage with it. Courts expect you to try to resolve disputes before litigating.
• Skipping the protocol for individual debtors. It can lead to the court pausing your claim or limiting the costs you recover.

In PayNudge, the final step of every sequence is a letter-before-action draft with your figures and history filled in, exported as a PDF. It's never emailed automatically: you review it and send it yourself.