Outstanding service on outstanding debt
Frequently asked questions
Q: What
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.
Q: Why
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.
Q: Can
you charge the collection commission payable by me to
the debtor?
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.