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Collecting Outstanding Debts

Maximising the effectiveness of your debt collections will result in substantial benefits. Here are a few simple steps to improving monitoring and debt collections.





Once you have vetted a client and entered into a credit agreement with them, you need to monitor the way they use their credit facilities. Focus on identifying customers who have a high probability of becoming delinquent before they actually become bad-payers or non-payers.

It’s advisable to obtain a company order or purchase form from the client. Get everything in writing on a letterhead – an email or verbal confirmation of the order is not good enough. This written confirmation can be used in conjunction with your own purchase order form.

The account payer is normally not the person who ordered the service; this is where that purchase order comes in handy as there may be queries about who placed and authorised the order.

Here are a few simple steps to follow to improve monitoring and collections:

  • Send the invoice with proof of service delivery, such as a signed delivery notice
  • Hand deliver invoices where you can and have the client sign delivery
  • If you have to post the invoice, follow up with a phone call to ensure that it was received
  • Send statements at the end of the month and ensure they reflect the amount outstanding in payment terms. Your accountant can apply overdue or “please pay” stamps
  • Follow up with telephone calls. Ask them to confirm when payment will be made
  • Keep all proof of communication – fax transmission slips, copies of documents posted, and records of phone calls (including date, time, who you spoke to and what their response was)
  • Keep your promises. If you say you will call again on Friday, do so. It shows your clients that you are on top of things and that they will not slip through the cracks

Collecting Outstanding Debt

What do you do when an account is overdue?
With some forms of debt, there are certain legal requirements that must be followed in terms of the National Credit Act (NCA) before legal action can be instituted. As the NCA is such complex legislation, these are best dealt with by a professional collector.

“It is prudent to start with a simple letter of demand to your non-paying customer and place them on terms to pay by a specified date, failing which you will hand the debtor over for debt collection,” says Bentley.

When do you hand a client over to a debt recovery specialist?
In most cases, when a commercial creditor hands over their customers for debt collection, the business relationship has broken down. “The collection process is not going to be endearing to what in all probability will be your ex-customer,” says Bentley.

“But at the same time, do not delay too long in the hope of keeping your delinquent customer. Creditors who act first are usually the ones with successful results; those who are slow are often the losers.”

Bentley advises that on a regular 30-day account, any account which is in excess of 120 days is a serious candidate to be handed over to a third party for collection.

What are the most common loopholes that companies need to know about?
If you are dealing with a customer that is a close corporation or a company, says Bentley, the business can be liquidated, leaving you without anyone to recover debt from as directors and members are not usually personally liable for the debts of the business unless you have had them sign a personal suretyship.

“Some debtors put up what is called a dilatory defence; in other words, they defend a legal action just to buy time and abuse the long legal process for defended matters,” adds Bentley. “This can be avoided by getting customers that request extension of payment terms to put such requests in writing so that later, when you sue them, they cannot say that there was an alleged fault with your product or service.”

What fee should a company expect to pay for debt recovery services?
You have to weigh up your options when choosing between an attorney and a debt collection agency. Always use a debt collector that is registered with the Council for Debt Collectors. “As much as you may feel you would like to cause physical harm to your delinquent customer, do not even think about using ‘leg breakers’,” cautions Bentley.

“Not only is it illegal and immoral, but there are also many stories about people who have been ripped off in turn by the ‘leg breakers’ and lost even more money in the process.”

Most debt collection agencies charge a commission on what is successfully recovered, while attorneys work on a tariff for work done, regardless of whether the process is successful or not.

“You must assess how far your debt collection agency can really go,” advises Bentley. “Many will promise legal action, but do they have the people qualified to do so? And if they do hand over to attorneys, is this going to cost you extra?

Also, a fixed commission could work out to be more expensive if the debt is substantial, so an attorney may be a better option when it comes to large commercial debts.”

Another word of advice from Bentley: “Make sure you find an attorney who specialises in debt collection and will report to you at least monthly, and not one for whom debt collection work is onerous.”

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Cash Flow

Financial Literacy Key To Business Success – Especially In A Tough Economy

What can South African SMMEs do to position themselves for success in tough economic times? Arming their people with basic financial literacy is a good place to start argues UCT Graduate School of Business Associate Professor Mark Graham.

Mark Graham




In times of economic hardship, good financial and management skills in a business can make all the difference. According to a recent article in Business Day, international investors are sniffing about South African SMMEs that have proven themselves to be well-run during this time of subdued economic growth – and are also attractively undervalued.

Strong balance sheets and stable management in an environment of slow growth economy with low liquidity adds up to some bargain long-term investment opportunities for international consortiums it seems. Among those who have been involved in investment or buyout offers in the past few months are Clover and Interwaste.

It seems self-evident to suggest that well-run businesses attract investment and success. But what actually makes a business – of any size – well-run in the first place?

There is obviously no short answer to this; good leadership, a clear strategy and a strong and motivated workforce all play their part, but one factor that is often overlooked is financial acumen – throughout the organisation. While the accountants and members in the finance team are expected to understand the numbers, this is not always a core competency required in other departments. Yet, having a good working knowledge of finance at every decision-making level, from new managers to members of the board, can be key.

Even if people don’t need to know a lot about finance in their day-to-day job, the more conversant they are on the subject, the better off they – and the business – will be, according to Richard Ruback, a professor at Harvard Business School and the co-author of the HBR Guide to Buying a Small Business. “If you can speak the language of money, you will be more successful,” he says simply.

Financial savvy will give the marketing manager the ability to demonstrate not only that something is a good idea/product or service, but that it makes financial sense too, for example. And it will make sure that the people in the HR team understand more clearly why reducing staff churn is a good idea not only for company culture but for the bottom line as well.

A knowledge of some basic financial decision-making tools (the all-important balance-sheet, for example) and an appreciation of the difference between profitability and cash flow will ensure that non-financial managers are more likely to effectively participate in business strategy and decision-making. Someone who understands the financial statements of a business understands the business in a way that is not otherwise possible. It’s like looking beneath the hood of a car and understanding how it all fits together and why the car can move forward – or not.

Such people can more confidently identify potential problems and inefficiencies before they impact the overall financial performance, because those warnings are almost invariably reflected in the financials first – and often at departmental level. Critically, they can also help identify financial irregularities, enabling them to call out and stop fraud and corruption in its tracks.

Equipping its people with financial skills is therefore a good strategy for a business looking to position itself for growth and investment. And it makes sense for individuals too – Joe Knight, a partner and senior consultant at the Business Literacy Institute in the US and the co-author of Financial Intelligence, says that an absence of financial savvy is “career-limiting.”

Let’s not ignore the fact that there are challenges however. Finance matters tend to scare a great many people. Traditionally, these areas of knowledge carry the stigma of being impenetrable, and financial literacy is not ideally developed at early levels. According to a study by the Financial Services Board, South Africa currently has a financial literacy rate of just 51%.

This means that roughly one out of every two people is likely to prefer to abdicate from financial decision-making – leaving it to the “numbers” people. But with some intervention and training it is possible to empower individuals to decode these mysteries and get to grips with the language of finance.

All things being equal, it’s not pure luck that allows some businesses to operate well and thrive while others fail. Well-run businesses are generally run by well-informed people. In short, decision-makers who don’t understand basic financial concepts and the language of finance simply don’t know what is going on.

While the SA government is currently talking up the need for foreign direct investment to rescue the country from the economic doldrums, there is much that ordinary businesses can do to position themselves for success. And ensuring that their people are adequately equipped to understand the nuances of business through the language of finance is perhaps a good place to start.

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Cash Flow

Trade Agreement Tips That Will Save You Costs

If you are looking to benefit from trade agreements, you need to keep the following advice in mind.

Tracy Venter




Trade benefits all parties involved. When a country has scarcity of certain resources or lack the capacity to satisfy their own needs, they have the opportunity to trade the resources which they produce in surplus, for the products they need or want.

When goods are transferred from one country to another, it stimulates the economy as products and money is switched between hands. Over the years, the competitive nature of moving goods from one country to the other, negotiating prices and opening new markets has caused certain agreements to immerge to promote trade between the member countries.

A trade agreement is an arrangement between two or more nations in order for goods to move more easily between borders with mutually beneficial tariffs imposed on imports. These agreements ensure that duty tax is removed or reduced on condition that the importer and exporter provide the correct documents. This is all the more reason for traders to familiarise themselves with the current trade agreements in place.

Tip1# Know Whether You Export To Or Import From A Country With A Trade Agreement

There are a few trade agreements that you need to be aware of which will significantly cut duty tax. The Southern Africa Development Community (SADC) Free Trade Agreement (FTA) is one of them. The fifteen SADC member states included in the agreement enjoy an impressive 85% free trade on goods.

Another trade agreement commonly used by South Africans is the South African Customs Union (SACU) which allows duty tax free movements of goods. This means zero duty tax is payable on trade between these countries. Trade agreements with European countries include the SADC-EU Economic Partnership Agreement (EPA) and the SACU European Free Trade Association (EFTA). We have prepared a list of all the trade agreements as well as the countries involved here.

Tip 2# Know Which Certificate Of Origin Is Necessary For The Specific Trade Agreement

Only traders who can prove that goods were produced or processed in a member country may benefit from these agreements. This is why importers and exporters need to submit paperwork attesting that the goods were made in the country listed as the beneficiary of the trade agreement. The proof provided is called a ’Certificate of Origin’.

A certificate of origin often abbreviated to C/O or CoO is a printed form or electronic document completed by the exporter and certified by a recognised issuing body, validating that the goods in a particular export shipment have been produced, manufactured or processed in a particular country.

The exporter has to submit proof that either a) the products were wholly obtained from that country; this means all components and manufacturing originated in that country, or b) that it is sufficiently processed in the country of origin.

In other words, although some components might have been imported, the product was sufficiently transformed, or value was added in such a way that the final item can be deemed as new or original. Furthermore, if a company was registered in one country and the manufacturing plant in another, the certificate of origin would be issued from the manufacturing plant’s country.  There are various certificates of origins used for different countries. Read here for more details about the different documents required to ensure you benefit from lower duty tax.

#Tip 3: Ensure The Certificate Of Origin Is Completed In The Right Manner

These documents must be completed correctly. Most of the information provided has to come from the exporter. If the wrong information has been reported, it can influence the relationship between the importer and exporter negatively.

Common mistakes when filling out a Certificate of Origin may include:

  1. Identifying the wrong country of origin
  2. Using the wrong H.S. code
  3. Providing an incorrect or incomplete and rather ambiguous description of the goods
  4. Not including a description on how the cargo is packed or reporting a total weight that does not include packaging
  5. Exporting goods made from imported material and not sufficiently processed to be deemed as originating from the exporting country.

A lot of information can be misrepresented on the certificate of origin. For this reason, we recommend making use of companies specialising in trade administration to ease the stress and to ensure that all the t’s are crossed and i’s are dotted.

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Cash Flow

Backing You With Smarter Tools

Manage income, track expenses and do more with the ultimate toolkit for your small business.

QuickBooks SA



You work too hard to work this hard. The good news is that you don’t have to break your back or the bank to run a successful business. Managing your business is easier when you’re using smarter tools with QuickBooks.

Since its launch over 20 years ago, QuickBooks has aimed to power prosperity for small businesses and the self-employed with services that help you with income management, expense tracking and more, allowing you to focus on growing your passion.

The new “Backing You” campaign extends this commitment to support small business owners through the challenges of business ownership – with a little help from Danny DeVito.

“The importance of small business is personal to me. At a young age, I watched both my parents and my sister build their own business from the ground up and struggle to balance family obligations with growing their businesses,” says DeVito.

“When Intuit QuickBooks approached me for this campaign, I felt this was a way that I could give back to this very important industry, show them how to make their lives easier and make them laugh along the way too.”

QuickBooks gives you a set of business tools that’ll do all the hard work for you, making sure you get the time to do what really matters to you. “Because collecting receipts is so 80s, and who has time to chase payments?” says Danny.

Join over 5.6 million customers globally and find the QuickBooks plan that works for your small business on Save 30% on your subscription today! Terms and conditions apply.

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