The truth about debt review


One thing that really stands out in my experience as a debt collection attorney, is that debtors almost always settle the outstanding debt if the debts are demanded whilst it is still fresh. This means that the older the debt you are attempting to collect, the smaller the chances of a successful collection. The reasons behind this will always only be speculation, but this strange occurrence teaches us one thing – DEBTORS MANAGEMENT IS S FULL TIME JOB.


Firstly, let us have a look at prescription and what this means, as this is a very real extinguishing threat to book debt.
The prescription of debts mean that, after a certain amount of time that the creditor has not actioned the collection of the debt, that the debt expires and becomes uncollectable. The prescription of debts is governed by legislation, to wit the PRESCRIPTION ACT, 68 OF 1969. The extinction of debts by prescription is governed by section 10 of the act, which confirms that any debts that are not collected in the time allowed for in section 11, shall be extinguished by prescription and therefore becomes uncollectable. Section 11 provides the periods within which time a debt would prescribe.

The prescription periods in rough, are as follows:
• 30 years in respect of a debt secured by mortgage bond, judgment debt, debt imposed in terms of any taxation imposed or levied under any law, certain debts owed to the state;
• 15 years in respect of certain other debts to the state (arising from an advance, loan, sale or lease of land)
• 6 years in respect of a debt arising from a bill of exchange or other negotiable instruments or notorial contract
• 3 years in respect of any other debt.

The majority of day to day debts will fall into the three year period mentioned in section 11 of the Act.


The key to keeping your debtors under control, is to constantly have collection of debts at front of mind- ALWAYS BE COLLECTING! Here are some hints on how to keep the books under control to avoid having your debtors book become astronomically large.


It is imperative to make the management of your debtors the responsibility of a specific employee or set of employees. The task is one that has to be performed diligently and if not attended to in this manner, will not have a positive impact on the debtors management as a whole.


Having a responsible employee to attend to the day-to-day debtors management is great, but this employee has to be trained sufficiently. Once trained in the exact process that the company has adopted in collection of its debts, the person will be able to attend to the duties by referencing the policy, streamlining the entire process.


It is critically important for each and every company to have a policy regarding the collection of debts. The policy should be all encompassing including each and every action and reaction from the sending of invoices to handing over of debts to attorneys.

Policies should be contained in writing, this will serve a dual purpose of ensuring that employees know precisely what to do and action and minimizes time spent in training of the person responsible for debtors management. A process in writing leaves no room for misunderstandings and ensures that a streamlined debt collection process is followed by the responsible employees.


Having the staff, the policies and the training done means nothing if the steps are not enforced consistently. In collection- consistency is key and any delays or failures to comply will result in the efficacy of the policy being reduced. If the steps are consistently followed, debtors will know that payments made late will result in action from the company.

Having monthly meetings to gain an overview on the debtors book and whether collection steps had been taken on overdue accounts, would serve to keep the collection of debts front of mind and ensure accountability of the responsible employee. This will also give time for any problems encountered to be discussed with the heads of the corporation to ensure that the policies work well when enforced.


Bad debt does not only become an issue on 120 days plus when companies decide that the debtor has to be handed over to attorneys. If a company’s payment terms are 30 days from invoice, the collection efforts at that time makes the world of difference on the number of debtors actually having to be handed over formally.
If you wish to gain more information on debtors management in the day-to-day flow of your company, you may also find these articles handy DEBT PREVENTION- WHAT IS IT AND WHY MIGHT I NEED IT? ; THE ANSWER TO GETTING DEBT COLLECTION RIGHT – GETTING YOUR POLICIES IN PLACE FROM THE START

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