How Debt Collectors Work
Overview
A debt collector is a business or individual that specialises in debt collection. This individual or entity pursues payments of debts owed by individuals or businesses.
To practise as debt collectors, this business or individual must be registered with the debt Collectors Council. They are tasked with collecting money. Your account has been handed over to them to recover the money you owe the credit provider. They are paid a percentage of the amount collected.
The National Debt Collection Act 114 of 1998 regulates the process of collecting debts in South Africa.
Before paying any money, you, as a consumer, have the legal right to a statement of the amount and how it was calculated. Also keep in mind that debt collectors cannot ignore the in duplum rule, which means that interest stops running when the unpaid interest equals the outstanding capital.
You can also report any unethical behaviour to the Council for Debt Collectors which is obliged to investigate any charge
As a business owner, you need to know how debt collectors work. It may make better sense to hire a debt collection agency, as handling difficult debtors requires patience, skill and perseverance.
Bad debt is a problem for all businesses, whether big or small. There are occasionally slow paying clients or those who simply stop paying.
As a business owner, to keep your cash flow in check, you need to know how to recover any money owed to your business.
Keep in mind that the longer you wait to begin your collection effort, the more difficult it may be.
Debt Collection Tips:
- Get commitment to a specific time for payment
- Follow up regularly
- Be prepared to take tougher action
- Be professional about the entire debt collection process
- Ask questions. It’s important to find out why your clients have failed to pay on time.
- Report the debtor to credit rating agencies.
