Accountability Debt collections

Dear Ashley I refer to your post on HelloPeter on 31 August 2021. One of Accountability’s main purposes is to enable its subscribers to mitigate the risk of incurring bad debts which is always inherent in doing business. This can be achieved, to a certain extent, by doing credit checks on clients right at the onset of business relationships. However, a clean credit record is not an iron-clad guarantee that a client will settle its debt: it merely serves as an indication of a person’s or company’s propensity to timeously settle its debts. It is inevitable, however, that, sooner or later, some of your debtors will fail to make payment for goods sold or services rendered. The current economic climate has increased that risk exponentially. In most cases, if a debtor receives formal notification from a creditor that some sort of legal action is imminent, the debtor will respond by making the required payment or, at least, seek to make a payment arrangement. There are unfortunately always some debtors who, for some reason or other, will not make the required payment. In the majority of cases, they have no sound reason for failing to make payment other than their own cash-flow problems. In a small percentage of cases, they may have sound reasons for not paying. It all depends on the merits of each case. Whenever a default on payments occurs, it makes good business sense to pursue a course of action that is firstly, sound in law and secondly, which carries the least cost. Obviously, the first step is to report the default to credit bureaux. If that fails to elicit a positive response from the debtor, consideration must be given to whether or not the amount claimed justifies the cost of litigation or whether to rather opt for debt collection by a duly registered debt collector, which is much less expensive. The litigation route is exorbitantly expensive and is to be avoided if at all possible. However, litigation is sometimes the only option open to a creditor. Debt collection will only be effective if the debtor co-operates with the debt collector. Debt collectors’ actions are governed by the strict prescriptions of the Debt Collectors’ Act, 1998. In terms of this Act, a debt collector may only make direct contact with a debtor via written communication or telephonically. A debtor who ignores correspondence or phones calls cannot be compelled to respond, other than by litigation. Debt collectors cannot issue summonses: only attorneys can do that, at huge expense. Accountability shares its subscribing members’ frustration at the slow pace in which certain debtors respond to the legal processes which it facilitates. Bad debt hurts business in general and also the country’s economy. A poor economy serves no one’s purposes. You are more than welcome to contact our offices at any time to discuss your concerns regarding your current or future debtors. We will always seek to find solutions for you.