How to Handle Bad Debt Greig Whitton Founder, Evergrow Antony
Arvan Partner, Maurice Philips Wisenberg Slide 2 Webinar outline
The National Credit Act Pre-legal strategies Legal strategies Slide
3 The National Credit Act When does it apply? If you defer payments
and charge interest and/or fees. If you use discounts to
incentivise prepayments. Slide 4 The National Credit Act When does
it not apply? Shareholder loans. Informal loans between family
members and friends. Transactions between stokvel members.
Supplying state bodies. Supplying juristic persons with an asset
value or annual turnover exceeding R1m. Credit agreements over
R250,000 involving juristic persons. Slide 5 The National Credit
Act What responsibilities do you have if it does apply? May need to
register as a credit provider. Slide 6 The National Credit Act What
responsibilities do you have if it does apply? May need to register
as a credit provider. Must assess ability of customers to settle
debt and not extend credit recklessly. Slide 7 The National Credit
Act What responsibilities do you have if it does apply? May need to
register as a credit provider. Must assess ability of customers to
settle debt and not extend credit recklessly. Must not exceed
permissible fees and interest rates. Slide 8 The National Credit
Act What responsibilities do you have if it does apply? May need to
register as a credit provider. Must assess ability of customers to
settle debt and not extend credit recklessly. Must not exceed
permissible fees and interest rates. Must ensure that all credit
agreements comply with the Act. Slide 9 The National Credit Act
What responsibilities do you have if it does apply? May need to
register as a credit provider. Must assess ability of customers to
settle debt and not extend credit recklessly. Must not exceed
permissible fees and interest rates. Must ensure that all credit
agreements comply with the Act. Must maintain a record of all
credit transactions. Slide 10 Pre-legal strategies Get the right
mindset Youre running a business, not a bank or a collection agency
Slide 11 Pre-legal strategies Get the right mindset Youre running a
business, not a bank or a collection agency Credit is a privilege,
not a right Slide 12 Pre-legal strategies Get the right mindset
Youre running a business, not a bank or a collection agency Credit
is a privilege, not a right Customers arent automatically entitled
to a credit account, they need to earn it Slide 13 Pre-legal
strategies Get the right mindset Youre running a business, not a
bank or a collection agency Credit is a privilege, not a right
Customers arent automatically entitled to a credit account, they
need to earn it Someone who owes you money is a debtor, not a
customer Slide 14 Pre-legal strategies Get the right mindset Youre
running a business, not a bank or a collection agency Credit is a
privilege, not a right Customers arent automatically entitled to a
credit account, they need to earn it Someone who owes you money is
a debtor, not a customer Making money trumps making sales Slide 15
Pre-legal strategies Do the right preparation Create more value to
justify more favourable payment terms Slide 16 Pre-legal strategies
Do the right preparation Create more value to justify more
favourable payment terms Offer and incentivise alternative payment
options Slide 17 Pre-legal strategies Do the right preparation
Create more value to justify more favourable payment terms Offer
and incentivise alternative payment options Prepare a robust credit
policy Slide 18 Pre-legal strategies Do the right preparation
Create more value to justify more favourable payment terms Offer
and incentivise alternative payment options Prepare a robust credit
policy Escalate qualifying criteria for larger credit accounts
Slide 19 Pre-legal strategies Do the right preparation Create more
value to justify more favourable payment terms Offer and
incentivise alternative payment options Prepare a robust credit
policy Escalate qualifying criteria for larger credit accounts
Complete thorough credit worthiness assessments Slide 20 Pre-legal
strategies Do the right preparation Create more value to justify
more favourable payment terms Offer and incentivise alternative
payment options Prepare a robust credit policy Escalate qualifying
criteria for larger credit accounts Complete thorough credit
worthiness assessments Monitor debtors vigilantly for signs of
financial distress Slide 21 Legal strategies Document credit
agreements thoroughly Reduce the risk of defaults and disagreements
May be mandatory should the NCA apply Provides leverage in the
event of legal action Slide 22 Legal strategies Insist on personal
suretyships Can deter bad debtors Provides leverage in the event of
legal action Slide 23 Legal strategies Issue letters of demand Many
debtors will pay up when threatened with legal action Contract a
reputable attorney Slide 24 Legal strategies Take legal action
when: The debt is over R5,000 Your debtor is unlikely to dig in
their heels Your debtor can actually pay what they owe Slide 25
Need more help? Evergrow forums Guides Greig: 021 671 8225 Antony:
021 419 7115
