To run a business effectively has many aspects of which one is the management of the debtor’s book.

If a business’s debtor’s book is not managed properly it may result in serious cash flow problems for the business and it may result in the business closing its doors.

One of the tools to manage a debtor’s book effectively is to implement a debt collection policy. This policy should be followed with discipline and should only be overridden in exceptional circumstances.

Before you start doing business with anyone you should remember the following:

  • Ensure that the contract between you and your client is drafted properly and complies with all the legislation applicable to your industry, the Consumer Protection Act as well as the National Credit Act. You should also ensure that the contract includes all the terms and conditions that will make it possible for an attorney to collect the debt, should it become necessary;
  • Ensure that the contract is duly completed and signed by your prospective client and that the original is returned to you;
  • Check the credit status of your prospective client, after you obtained the necessary consent, in order to ensure that your prospective client does not show signs of becoming bad debt for your business;
  • Ensure that if your contract is subject to the National Credit Act, that you set an appropriate credit limit that will be applicable to the contract between you and your prospective client;
  • Invoices should clearly state that they are payable immediately.
  • Ensure that you follow up on all overdue invoices the moment that the invoice becomes overdue.

Should you struggle with clients that default on the payment of their invoices and you decide to consult with an attorney to collect the debt on your behalf, make sure that you consult an attorney that specialize in debt collection as this will increase your chances of recovering the debt.

Soekie Riekert Botha


This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)