is debt collection?
A: Debt collection in the narrow sense of the word means the legal proceedings against a debtor by a creditor for the collection of monies due to the creditor.
choose us as your collection agency?
A: It is proven that the minute a collection agency gets involved, the debtor knows that collection of payment has now become a reality and priority, and the sooner he pays the less the pressure will be on him/her.
Research shows that the longer the outstanding account, the higher the risk and chances of non-recovery.
Q: What is a professional debt collection service?
A: A professional debt collection service is a specialized business that collects overdue accounts for creditors/clients. Professional debt collectors are third parties to the transaction that created the debt. They are collecting and working for the creditor but are not employees of the creditor. Sometimes third-party collectors are confused with creditors who have in-house departments collecting on their own behalf. Third Party debt collectors are regulated by the Debt Collectors Act, 114 of 1998 in South Africa.
Q: Why are accounts referred for collection?
A: Most accounts are referred for collection because they have gone unpaid beyond the due date and often the creditor has not received any communication from the consumer. People who provide goods and services to customers on credit rely on their customers' promises to pay. While they value their customers, they must also depend on payment to meet their own costs and expenses. The longer an account remains unpaid, the likelihood lessens that it will be paid. When the creditor can no longer afford to carry past-due accounts and cannot collect them economically, the accounts are either written off, or referred to professional, third-party collection agencies.
Q: What does a typical professional collection agency do?
A: The agency receives payments on the past-due accounts more economically than a creditor because their operations are specific and specialised. In many cases the debt collection agency first has to find an accurate address or telephone number so that they can contact the person who owes the account, a process called “skiptracing.” After confirmation of the proper address the office must send a letter of demand that allows the debtor to dispute the validity of the debt, and/or request verification of the debt. The exact procedure varies from collection agency to agency. The agency will send letters and make personal calls in an attempt to obtain a full and final payment or alternatively negotiate a payment arrangement with the debtor.
Q: What is our fee?
A: Our fee structure is based on "No Collection, No Fee Commission" basis. Collection commission can be as low as 10%. A commission is charged on successful collection and collected amounts only. We have a standard collection rate but depending on the volume and nature of the debts, preferential rates may be given to clients that want to hand over on a contingency basis.
Q: Can the agency charge a tracing fee?
A: The agency is not permitted to recover any tracing fee from a debtor and the cost is for the debt collector’s own account. If it is necessary to have a debtor traced, it is for the creditor’s account. The cost of having to trace the debtor may only be recovered on behalf of the creditor if the creditor has a legal claim against the debtor for the recovery of such costs. A tracing fee may in any event be claimed on behalf of a creditor only if the whereabouts of the debtor had subsequently become unknown and necessitated the tracing of the debtor. Our agency offers this service free of charge to our creditors/clients.
you charge the collection commission payable by me to
A: The agency may not add the collection commission charged to the creditor onto the overdue account or create a second account due. Debt Collectors may only charge necessary fees and expenses as per the regulations of the Debt Collectors Act No. 114 of 1998. However, if the creditor has a signed agreement between him and the debtor that if the debt becomes overdue and the creditor hands over the overdue debt to a collection agency, then the creditor can be held liable. The creditor however, should then submit a second claim to be collected by the agency.
Q: What is your turnaround time for collection?
A: We work on the cases between two to eight weeks before getting back to the clients. This allows us to perform all the necessary searches and investigations, to contact and make appointments with the debtors and to conduct all the necessary follow-up action.
Q: How do I hand over my cases to you?
A: You can submit your instruction via our “submit debt placement online” division or you can e-mail us and let us find out more about the nature of the debt, the age of the debt and the last payment date. You can also send us your contact details and we will call you or get in touch by phone or fax. If necessary, arrangements can be made for us to visit you.
Q: You are in South Africa. How can you collect in my area?
A: Our company is affiliated and has partnered with agencies in over sixty countries, and we cover all of Asia-Pacific, Americas, Africa, Europe and Middle-East. Our difference is your debtor is immediately contacted by collection professionals in the local language by local experts. We attend world congresses to partner and network with agencies internationally.
Q: What type of debts do you collect?
A: In general, we accept all kinds of claims, provided that the creditor provides us with supporting documents. We collect debts for goods sold and delivered, as well as professional services rendered.
Q: How old can the debt be?
A: If a debt is due it is due and collectable. There is legislation that will prohibit the creditor from obtaining a judgement in court for debt older than 3 years, but this does not necessarily mean that the debtor is not liable for the debt. The creditor will still have the plea for prescription.
Q: What are the lowest amounts that you collect?
A: We collect any amount outstanding on a contingency basis.
Q: Are your rates the same for all debts processed?
A: Yes. Generally, you'll find our rates are less than those charged by traditional agencies. Most importantly, we consistently make personal, professional contacts on your debtor(s).
Q: How do I know you will collect and pay me?
A: We have been in the industry for many years and have an impeccable international reputation for good business practices and integrity. All monies collected must be deposited into a trust account and audited by qualified auditors in terms of the Debt Collectors Act No. 114 of 1998. We must also submit a audit certificate to the Council for Debt Collectors once a year.
Q: What is your ratio of recovery?
A: There is no quick answer for this question. The ability to collect is basically dependent on how well you, the creditor, have done your job, the age of the debt, the amount and location and jurisdiction of the debtor. If your information is outdated, and your claim is old and poorly worked, the recovery of the debt will be more difficult. The origin of the country in which the debtor is located is also a factor to consider. We will provide you with advices on contact.
Q: How fast will you take legal action?
A: Our skills are to collect without legal action in the first place. Legal action is available when we have attempted every means to collect. Our software program is a pre-litigation series of personal contacts directed upon to your debtor. It is the speed and intensity of these professional, personal contacts that gets the results we both desire. Having said this, if legal action is required or recommended we will provide you with a report on what action has been taken.
Q: How will I know what you're doing?
A: We do not provide monthly status reports as many of our clients are only interested in payment which leaves us with more time to focus on collections. Some clients however are dependant on feedback for their records and we will provide regular reports if the client so desires. Our online file monitoring and performance review system will be up and running soon and you will be able to monitor progress of your files 24 hours a day.
Q: Do you have an operating procedure?
A: Collection is the ultimate aim in our business. However, we also strongly believe in upholding the corporate image of our clients and will not compromise our operating procedures. Besides having our own code of conduct and business ethics, we also adhere to the code of conduct prescribed by law.
Q: What is your collection procedure like?
A: Our general modus operandi is: the debtor is contacted directly via telephone, correspondence or a field call, and all efforts are made to settle the debt amicably without having to instigate legal action. Most of the assignments are completed at this stage. In the event our efforts not being successful, we then assess the debtor’s financial situation and assets.
If our investigations reveal that there are assets that would provide satisfaction of your debt, and the debtor refuses to respond to our attempts to negotiate the recovery, we shall proceed with legal action on your behalf, if in our opinion, legal action is warranted.
Q: What will it cost me if you don't collect?
A: Nothing, on condition that you have not withdrawn the case. We charge a withdrawal fee if we work on a case. Our fee is based on collection only. There is no fee if we fail and our costs are for our own account. There are NO advance fees. NO binding agreements. You pay our low fee if we collect only.
Q: Besides collecting bad debts, what other kinds of services do you offer?
A: Collecting bad debts for individual and corporate clients is only one part of our business. Our legal associates will provide legal advice and consultancy, field collection, credit and debt management consultancy programs and comprehensive accounts receivable and accounts payable management and collection services to clients.
Credit reporting and business information, which is so essential in making decisions regarding the granting of credit are another service of the company, along with risk management. We are always available to our clients for discussions and to offer advice and implement programs to overcome and solve their debtor problems.
NATIONAL CREDIT ACT NO 345 OF 2005
The above Act came into operation on 1 June 2007, and it is important that debt collectors should study the Act as they will be affected by some of its provisions. Although a newsletter is not the place to discuss the Act, it is, however, deemed necessary to draw the attention of debt collectors to the provisions of Section 129 of the Act.
In terms of this section, the credit provider must notify the debtor in writing that he or she is in default and that the debtor has the right to refer the credit agreement to a debt counselor for debt review. This letter is a prerequisite before a credit provider may commence with further debt enforcement. This notification can only be sent to the debtor once the debtor has already been in default for 20 days. A period of 10 days after the letter has been sent must lapse before the credit provider may commence with proceedings to recover the debt, in other words, handing over to an attorney or debt collector for recovery.
Section 86(2) of the Act also contains a very important provision, namely that the consumer (debtor) is prohibited from applying for a debt review in respect of a credit agreement (including incidental agreements) if the credit provider under such an agreement has already proceeded with enforcement of the agreement as a result of the debtor’s default.
In other words the credit provider must have sent a notice to the debtor in terms of Section 129 of the Act, and 10 days had transpired since the date the letter was sent and the debtor did not refer the credit agreement to a debt counsellor for a debt review. If the credit provider has sent a notice in terms of Section 129, the credit provider may commence legal or collection procedures and the debtor will be prevented from applying to a debt counselor for a debt review.
In the light of these provisions debt collectors will be well advised in accepting a mandate to collect a debt, to ascertain from the credit provider whether a letter as required by Section 129 of the Act had been submitted by the credit provider to the debtor.
Attention is also drawn to the fact that the Council for Debt Collectors is of the opinion that the provisions of the Act apply equally to credit agreements, for example for monies loaned and advanced or goods purchased and “incidental” credit eg, for instance under certain circumstances, a medical bill which the medical aid did not pay.
Further information about the Act can be obtained from the National Credit Regulator’s website at www.ncr.org.za or 086 0627627.