Dealing with Non Paying Debtors in South Africa
Our team at i-Check Data Solutions have put this article together to provide some advise on dealing with non paying debtors in South Africa. Getting paid on time is key to safe guarding your cash flow situation. Start by sending out reminders via email or fax to the contractor reminding them about payment that is due. If you have had no response from the reminders, then you must send a final demand. You usually send three reminders. Keep copies and proof that these have been sent and received by the party that owes you money.
Even after you’ve sent a number of statements and reminder notices, some customers will continue to ignore you. We have a simple debtor tracing system that will provide you with all the available contact details of the debtors you are trying to connect with. If you still fail to get positive results then it may be worth hiring an outside collection agency to assist you to get results. There core business is getting money out of people and their approach will more calculated and firmer. Many customers are scared of damaging their credit rating, so the simple act of being contacted by an external third party is often enough to worry many customers into action and to pay you.
In order to avoid similar situations in the future, you can take few steps to protect your business.
Before you agree to do any work for a company, do a credit check and ensure that they are in a position to pay you, i-Check Data Solutions offers one of the most comprehensive and affordable commercial credit reports in South Africa currently. For R 99 ex vat, we can give you a wealth of background information on the company requesting credit and this will empower you to make a smart decision on whether to grant the credit or not.
How to handle bad payers
The National Credit Act has established guidelines for dealing with delinquent debtors, but you have to work through a credit bureau.
Listing defaulting debtors
You can list defaulting debtors with a Credit Bureau so that details of their debt appears as an “adverse listing” in the national credit databases. But this must be done in strict accordance with the terms set out in the National Credit Act.
Once you have completed the collection process and have had little success, you have little choice but to list them. If you decide to list defaulting debtors, the first step is to notify them in writing that they will be listed. Debtors have 20 days in which to respond, If they don’t respond to the registered letter, then contact one of the four large credit bureaus and request an adverse form.
The Adverse Form must be completed and returned to the credit bureau that will in turn check if the delinquent company is already listed. If some form of information on that company does reflect on the credit bureau’s records, they will attach your adverse listing to that report free of charge.
Create a file
If the delinquent company has not yet been listed then the procedure is different, You have to contact a business consultant at a credit bureau and arrange to create a file for the defaulting company. There is a fee to do this and once paid, the delinquent company will be listed.
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