How to get what’s owed to you - The Legal Way

JOHANNESBURG - April 10, 2015 - PRLog -- As a business organization, we experience numerous stressful situations fueled by clients’ inability to abide by his/her contractual obligations. The most common one stems from those who are in arrears or just simply refuse to pay for products/ services provided to them. This kind of problem affects cash flow and hinders on our ability to pay our own suppliers. A formal process should therefore be in readiness for when this happens, which inevitably will.

The National Credit Act indicates that a credit provider may begin with legal proceedings as early as twenty days of the consumer being in arrears. However, this may only be done via the correct channels. Section 129 of the Act places an obligation on a credit provider to notify the consumer of its intention to hand him/her over for the commencement of legal proceedings prior to doing so.

Simultaneously, the credit provider must advise the consumer of his/her right to visit a debt counselor. Should the consumer after ten days not have applied for a debt review with a debt counselor, the credit provider may then proceed with further legal action. In a case where the consumer has applied for a debt review no legal action may be taken until it has been found by a court or a debt counselor that the person is not over-indebted.

A debt collector should always try to consult with a debtor in order to negotiate an acceptable arrangement as to when the overdue amount will be paid.

Sometimes, there is a valid reason for a payment not being made which maybe that your client has not received the relevant documentation from you. It's your responsibility to find out exactly what paperwork each client needs in order to make a timely payment, and to send these with your invoice.

Your written invoice must clearly state exactly how much is owed and what the terms of payment are. Encourage your client to let you know if there's a problem or something missing, as soon as they receive your invoice. Send these in a timely manner, with increasingly firm insistence for payment.

It's natural to feel angry at a customer who delays payment, especially when there's a large amount of money that needs to be paid. But remember that it's still a customer and if you become overbearing in your efforts, you can turn the customer off.

Tips for collecting on overdue accounts

Start your collection efforts on day 31 -Do not wait until two months or more have gone by. The longer you wait to begin your collection effort, the more difficult it may be to collect because of mixed up paperwork or reassigned contacts.
Work through purchasing or accounts receivable. Try to deal with someone other than your regular contact to avoid irritating the individual.
Get commitment to a specific time for payment. Once you get a contact to agree on a date for payment, if the payment isn't made on the agreed date, you gain some leverage; no one likes to be seen as dishonest.
Follow up regularly. Assuming you don't get the right person or commitment to a payment date, try not to let the matter get lost in your own priority scheme.
Be prepared to take tougher action. If previous tactics do not work, consider telling the customer that you will initiate collections procedures and even court action if necessary. Let them know that while you don't want a fight, you consider it important that everyone honour their part of the deal.

Remember these pointers in your own payment process as well, and don't become one of those clients that need to be chased for money.