With the advent of the Debt Collector’s Council of South Africa, the industry is moving forward to a transparent, accountable arena where debt collectors are held responsible for their actions, and can be penalized accordingly. The Debt Collector’s Act is the vehicle used to govern debt collecting agents in South Africa and coupled with the National Credit Act, which cover credit dealings, you should be provided with enough peace of mind, to consider appointing an external debt collection agent.

What qualifications would the ideal commercial/corporate debt collector need to have, to be appointed with ease of mind?

• They should operate on a “no success, no fee” basis. Do not pay them until they have successfully initiated a payment.
• The debtor’s payments should be collected into your bank account, or then into the debt collector’s audited Trust account. Money should then be transferred into your bank account at the end of that month.
• They shouldn’t normally charge any admin or monthly fees. And no “deposits” should be requested from you either.
• The debt collector’s company/cc should be registered with the Debt Collector’s Council of South Africa, as well as all the relevant employees.
• They should be able to do reconciliation of accounts effectively.
• They should have access to reliable lawyers/attorneys if they are not a legal concern themselves.
• They should provide you with a monthly progress report, indicating what action has been taken on each outstanding account, together with the amount of money collected that month, with the balance outstanding.
• A case should not be with them for longer than 2 months without any progress made, and should have a clear payment plan if a longer period is inevitable.
• There should be clear communication between yourself and the debt collector at all times, so that you always know your rights and privileges and what the best course of action is, with regards to each individual case handed over for collection.
• They should be able to offer you sundry services like default listing of individuals and businesses, tracing of absconded individuals and businesses, registering of 12 month trace alerts and listing of r/d cheques.
• They should be able to provide you with at least 3 referrals, providing you with the necessary info.
• Their contract should be mutually beneficial and must indicate what they’ll do for you, when and under which circumstances. It must also indicate how payments should be made between yourselves.
• They should also willingly supply you with verified statutory information, for example full contact details, registration numbers, ID numbers, VAT registration numbers and clearance certificates and the contact details of their auditor/bookkeeper.

An added bonus is a situation where the same debt collecting company can provide you with credit information reports as well. That way you can minimise risk by getting all the relevant info on your current debtors, as well as info on all future potential clients. That way you can weed out all the bad payers and non-payers beforehand! Rather have the investment of good, reliable credit information, than the soul-deadening unexpected loss of thousands of Rands.

You should thus be very cautious in appointing an external debt collection agency, but please know it can still be done. Just do proper homework first.