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A Second Debt Recovery Letter reminds your client or customer that they owe you or your organisation money after you have already sent a first reminder. Second Debt Recovery Letters should be used when your client or customer doesn’t pay an invoice on time. They are the second step in the debt recovery process.
Use this Second Debt Recovery Letter to:
recover money that is owed to you or your organisation
take further action after a First debt recovery letter was sent and the debt remains outstanding
commence a more formal procedure for the collection of the debt
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Re: Invoice Number(s):
Further to our letter of we are writing to you about the fact that there is an outstanding amount of £ in respect of the above invoice(s). This amount was due for payment on .
Our credit terms stipulate full payment within days and this account is now days overdue.
Please arrange payment of this account today. If you cannot make full payment at this time, please contact us immediately on to agree a payment arrangement that is mutually acceptable.
Your prompt attention to this matter would be greatly appreciated. If you have any queries regarding this account, please contact us as soon as possible.
If payment has recently been made, please accept our thanks and ignore this reminder.
Yours sincerely,
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Send a final reminder before bringing a claim to recover debt
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This Second Debt Recovery Letter template covers:
your details (ie the creditor’s details)
your customer’s or client’s details (ie the debtor’s details)
the amount of money owed (ie the debt)
the date the debt should have been paid by
whether interest is payable on the debt, and:
an automatic calculation of the amount of interest to be paid in total
an automatic calculation of the continuing daily amount of interest charged as long as the debt remains unpaid
a threat of further action which may be taken if the debt is not paid
You need this Letter when you have already sent a First debt recovery letter to the debtor reminding them to pay outstanding Invoices. This is a second reminder to your customer to pay the debt, ensuring that they understand the consequences of not settling the payment, which include late payment interest charges, for business transactions and/or a threat of legal action.
You need to send two letters to a client or consumer before you can issue a Final demand letter, which is the last step before taking formal action to recover the debt.
As is the case with the initial debt recovery letter, you can use this Letter to further a debt recovery process with both individuals and organisations, whether in the course of business or not.
This will depend on whether you have a contract with the debtor and whether they’re a business or a consumer (ie a private individual).
If a contract is in place, you can charge interest in accordance with the terms of the contract. If a contract isn’t in place, you can only charge interest on late payments if it's a business-to-business transaction and statutory interest applies. Currently, statutory interest is 8% plus the Bank of England base rate, which is subject to change. For more information, read Calculating interest on commercial debts.
Unlike the First debt recovery letter, this second reminder will request that the debtor settle their bill immediately.
If, after you have sent this Second Debt Recovery Letter, the debtor has not settled their account or arranged an alternative payment arrangement, you should issue a Letter before action.
Making a Second Debt Recovery Letter online is simple. Just answer a few questions and Rocket Lawyer will build your document for you. When you have all of the details prepared in advance, making your document is a quick and easy process.
To make your Second Debt Recovery Letter, you will need the following information:
Introductory details
The debtor’s details (eg legal structure, name and address).
The creditor’s (ie your) details (eg legal structure, name and address).
If the creditor is a company, partnership or LLP, who is signing on its behalf?
Will the Second Debt Recovery Letter be printed on business paper that includes the creditor's business name and address?
When will the Second Debt Recovery Letter be sent?
When was the first letter sent?
To whom is the Second Debt Recovery Letter addressed?
Debt
What is the invoice number for the invoice which hasn’t been paid (in full)?
How much money does the debtor owe?
How many days did the creditor have to pay the invoice and when was it due?
How many days is payment overdue by?
Is there a contract in place with the debtor?
If there is a contract
Will contractual interest be claimed on the debt?
If so:
Was contractual interest claimed in the first letter? How many days have passed since the first letter was sent?
What is the annual contractual interest rate?
If not, what is the statutory interest rate?
If there isn’t a contract
If the debtor isn’t a company, partnership or LLP, are they a consumer (ie a private individual) or a business?
If the debtor is a business, will statutory interest be claimed on the debt?
If so, what is the annual statutory interest rate?
If not, at what rate does the creditor reserve the right to claim statutory interest?
If the debtor is a business, was statutory interest claimed in the first letter? How many days have passed since the first letter was sent?
Alternative payment
Does the creditor offer the option of making an alternative payment arrangement?
If so, what is their telephone number for arranging alternative payment?
A Second Debt Recovery Letter is the second payment reminder you send to a debtor when they owe you money. As a result, this Letter Second Debt Recovery covers:
Sender and recipient details
The start of the Second Debt Recovery provides details of the creditor and debtor, including their names and addresses.
The body of the Second Debt Recovery
The body of the Second Debt Recovery sets out details relating to the debt owed by the debtor. This includes:
the invoice(s) the Second Debt Recovery relates to
the date the first letter was sent
the amount of money owed
when payment was due and how many days the payment is now overdue by
if relevant, the amount of interest due on the debt and how much the debtor has to pay in total
the option for the debtor to request an alternative payment arrangement
The Second Debt Recovery Letter includes mathematical calculations to work out the amount of interest due and the total money owed by the debtor.
If you want your Second Debt Recovery Letter to include further or more detailed provisions, you can edit your document. However, if you do this, you may want a lawyer to review or change the Second Debt Recovery Letter for you, to make sure it complies with all relevant laws and meets your specific needs. Ask a lawyer for assistance.
Consider entering into a repayment agreement
By entering into a repayment agreement with a debtor, you help avoid the hassle and expense of legal action. Repayment agreements set out how, and over what time period, a debtor wishes to repay the money they owe you. Repayment agreements will only be relevant in specific circumstances (eg when the debtor is able to pay the debt). Use a Letter accepting payments in instalments to accept a debtor’s repayment plan and consider formalising your agreement with a Promissory note. For more information, read Repayment agreements.
Follow up with the correct documents
A Second Debt Recovery Letter is the second letter you should send as part of the debt recovery process. It should follow a First debt recovery letter. If you send a Second Debt Recovery Letter and the debtor does not pay or contact you to arrange a different payment arrangement, you should send a Letter before action. This is the final letter in the debt recovery process and is the last step before starting formal legal action. For more information, read Payment reminders and follow our How to recover debt checklist.
Understand when to seek advice from a lawyer
Ask a lawyer for advice:
on debt recovery procedures and dispute resolution
on debt recovery outside England and Wales
as to whether an insolvency procedure is appropriate
