Tshwane debt collectors to recoup over R12-billion in unpaid municipal accounts

The Tshwane metro appointed 34 debt collection agencies to recoup more than R12-billion it is owed by residential and business customers.

The metro said this week that the panel of debt collection agencies were appointed with effect from Monday, 2 November 2020, on a three-year contract to collect the outstanding debt of 120 days and more from 93 113 residential and businesses.

The metro’s spokesperson Selby Bokaba said the debt amounted to a total of R12.8-billion.

“The appointment of the debt collection agencies will benefit the city by increasing the revenue collection level, thus improving cash flow and the capacity to execute legal action against the defaulters,” he said.

“The city has attempted to recover the outstanding debt through other less drastic measures such as credit control actions, debt calling and via electronic reminders, but all these efforts were in vain. The city was left with no option but to outsource the recovery process.”

He said the metro constantly sends alerts to its customers whose municipal accounts were in arrears to remind them of their debt before their accounts reached 120 days.

The metro sends SMSs and invoices per email calls from the outbound call centre, a Robo-dialer doing automatic calls to defaulting customers and final demands delivered at the property.

“Debtors have also been encouraged to take advantage of the city’s incentive programme to bring their accounts up to date,” he said.

“The agencies were appointed subject to the following provisions; the number of jobs to be created through this project, spin-offs to the local economy and strategy for the appointment of locals,” Bokaba said.

He said the metro had “stringent conditions” set that would not allow any commission to be paid should the agency collect less than 1.5% of the total book handed over.

“For example, if a R100-million debtor’s book is handed over, the total monthly collection should at least be R1.5-million to qualify for a commission.

“The agency will collect arrear debt and inactive debt on a commission basis, calculated on the capital amount, plus interest on the outstanding amount from the handover date,” he explained.

“The interest rate will be charged by the city to its consumers on overdue accounts as determined from time to time.”

Some of the stringent conditions set by the metro include:

• On accounts where the debtors have paid the full outstanding amount before the agency has instituted the first collection action, regardless of when the account was handed over, the agency will not be entitled to the commission.
• No commission will be paid on direct debit payments concluded by the city.
• Commission will only be paid on payments collected on the outstanding amounts on the accounts (current account excluded).
• In instances where the full amount is not recovered, the agency will only be paid commission upon conclusion of a settlement plan (arrangement) on the city’s SAP system.