Debt collection in South Africa – a solution for unpaid invoices

Tip of the day: a solution for unpaid South African invoices! If you speak Dutch and have heard of the South African expression « Dit help nie om oor vermorste melk te huil nie », they’ll know it translate to Flemish as « Gedane zaken nemen geen keer ». It means that...

Compensatory interest

Compensatory interest Compensatory interest is interest awarded by the court to compensate the period of time between the sustaining of a loss and its reparation. This interest partakes in the principle of full reparation of the loss enshrined in Article 1382 of the...

Default interest

Default interest Default interest is interest resulting from the late or overdue payment of a sum initially fixed by a commercial contract. This interest is paid by a debtor to his creditor to offset a loss occasioned by his late payment. This interest likewise...

Reverse factoring

Reverse factoring   Reverse factoring is a financial management mechanism enabling a financial enterprise to make immediate payment in favour of its contractors and suppliers. So, how does reverse factoring actually work? First, the company concerned receives its...

Provisional enforcement

Provisional enforcement Provisional enforcement or enforcement by provision is a mechanism whereby an obtained judgment may be enforced despite the appeal or legal remedy sought by the party against which the judgment is given. Such provisional enforcement may be...

Instalment loan

Instalment loan The instalment loan is any credit contract for which a sum of money is placed at the disposal of a client by a bank or another credit agency in Belgium. The client undertakes to redeem the loan through regular payments according to a set per-month...

The Justice of the Peace

The Justice of the Peace The Justice of the Peace has a civil jurisdiction competence to hear and decide in civil or commercial cases in which the amount of the claim does not exceed € 5000. (Invoices, unpaid rent, …) Beyond that general competence, certain specific...

Consular judge

Consular judge The consular judge is a judge who is not a professional judge and who sits in the Commercial Court next to a professional judge. The consular judges have the particularity of not being judges by profession. In fact, they come from commercial...

Commercial Court

Commercial Court The Commercial Court is a court invested with three kinds of different competences: A general competence: the Commercial Court is competent to hear all cases of dispute between enterprises, regardless the amount involved in the current...

Compulsory liquidation

Compulsory liquidation Compulsory liquidation is a court-based procedure where the court rules that a company is in a suspension of payments situation as well as being beyond rescue. Generally, companies are created for an indefinite period. However, they...

Collective debt settlement

Collective debt settlement Collective debt settlement is a legal procedure that a debtor can resort to if they have structural debt issues. By referring the matter to the commercial court, they will be able to stabilise their financial situation and...

Pledges

Pledges A pledge is a contractual guarantee whereby the debtor is dispossessed of one of its assets in favour of the creditor in order to guarantee their debt. When the asset consists of moveable goods, it is referred to as a pledge. When the asset is...

Summons

Summons A summons is an extra-judicial document addressed by the creditor, via a bailiff, to the defaulting debtor, ordering the latter to appear before the appointed court. Generally occurring after an attempt at amicable recovery has proven fruitless,...

Judicial settlement

Judicial settlement Judicial settlement is a procedure designed to protect, under a judge’s control, the continuity of all or part of a struggling company.  This procedure is a possible option when a trader, a person exercising a liberal profession or a...

Judicial recovery

Judicial recovery Judicial recovery is a legal process that consists of referring an unpaid debt to a competent court in order to recover it. Generally speaking, the creditor will initially seek to recover the amount owed to them without judicial...

Debt write-off

Debt write-off A debt is written off by a creditor when they carry out an accounting operation that eliminates this debt from the accounts receivable. It means that the creditor considers the debt as lost and the corresponding sale will also be removed...

Debt forgiveness

Debt forgiveness The forgiveness of a debt is the voluntary abandonment by a creditor of their right to demand payment of the receivable by the debtor. By proposing the debt’s forgiveness, the creditor releases the debtor from their repayment obligation....

Amicable recovery

Amicable recovery Amicable recovery refers to all actions and techniques used by a creditor to recover a receivable from a debtor without resorting to legal proceedings. It involves the creditor trying various methods (reminder letter, telephone follow-up,...

Doubtful debts

Doubtful debts A doubtful debt is a receivable which, as its name suggests, presents a likely or certain risk of non-payment. However, the person or company owed the debt is not able to definitively prove that this receivable will be lost, so it is...

Suspension of payments

Suspension of payments Suspension of payments is a situation affecting an individual or a company whereby they no longer possess sufficient liquidity (available assets) to repay their outstanding debts. The state of suspension of payments should not be...

Bilateral legal act

Bilateral legal act A bilateral legal act is one which requires the common will of two separate parties in order to exist (contracts, etc.). Note that the unilateral legal act should not be confused with the unilateral contract, which requires the common...

Unilateral legal act

Unilateral legal act A unilateral legal act is a legal act resulting solely from the will of the party offering it, and does not require consent from anyone other than the offering party. The latter undertakes to accomplish a given service of their own...

Legal act

Legal act A legal act is the expression of one party’s will to create legal consequences. The legal act differs from the legal fact, the consequences of which result from the law and not from the will of a single party (road accident, death, infringement)....

Salary assignment

Salary assignment A salary assignment arises out of an agreement between an employee (assigning debtor) and a third party (assignee creditor) who agree that the latter will acquire ownership of the assignable part of the compensation that the employer (the...

Assignment of debt claim

Assignment of a debt claim The assignment of a debt claim is the mechanism by which a creditor (the assignor) assigns to a third party (the assignee) a claim, of which they are the holder, with regards to their debtor (the assigned). Many examples in our...

Compulsory execution

Compulsory execution Compulsory execution is the act of proceeding with the execution of a sentence despite the debtor's inertia or resistance. The purpose of compulsory execution is to enforce a contractual commitment or a court decision. Several...

Writ of execution

Writ of execution A writ of execution is a legal document containing the order for execution, which officially certifies the existence of a liquid and matured claim. It also enables the holder to obtain execution of the claim and authorises a bailiff to...

Invoice

Invoice An invoice is the document, issued by a creditor, describing a payment obligation (the debt, the claim) and its origin. An invoice meets several needs: Accounting (keeping a record of transactions) Taxes (for the State to collect what it is owed)...

Debt

Debt A debt is the obligation that a person (the debtor) is liable to execute towards another person (the creditor). The debt and the receivable (or claim) refer to the same obligation, but then seen either from the creditor’s or the debtor’s perspective....

Creditor

Creditor A creditor is a physical person or corporation possessing a debt claim on another person, called the debtor. In other words, it is the person who is owed a debt. A distinction must also be made between a preferred creditor and an unsecured...

Debtor

Debtor A debtor is a physical person or a corporation owing something to another person, called the creditor. In terms of debt collection, the debt is a sum of money. The debtor therefore has an obligation to pay this sum of money, the debt, to their...

Costs consumer debt collection

Costs consumer debt collection The law about amicable consumer debt collection limits costs that the debt collection actor can add to the debt. How? This law stipulates (article 5) that it is prohibited to require any late payment compensation to the debtor, except if...

Summons letter

Summons letter A summons letter is a letter whereby a creditor, a debt recovery company, a solicitor or a bailiff formally requires the payment of a sum owed by a debtor. The summons letter is similar to a letter of demand formal notice and the reminder...

Creditor: preferential or unsecured

Preferential or unsecured creditor Preferential creditor A preferential creditor is a creditor receiving a preferential right to payment before other creditors in the event of a bankruptcy. There are two types of preferential rights: on the one hand, the legal...

Temporary receiver

TEMPORARY RECEIVER When actual, serious and converging elements lead to the conclusion that bankruptcy conditions are matched for a company, the president of the Tribunal of Commerce may appoint one or more temporary receivers. He does it on request of a third party...

Conservatory seizure or attachment

Conservatory seizure or attachment The conservatory seizure allows the dissatisfied creditor to make the debtor's assets unavailable for a certain period (max. 3 years) to preserve his rights. This thus prevents the debtor from making his assets disappear before the...

Bankruptcy judge

Bankruptcy judge The bankruptcy judge is a magistrate and member of the commercial court. Often with a background in the private sector, they are responsible for accelerating and monitoring operations and managing the liquidation of a bankruptcy conducted by the...

Receiver

Receiver In the context of a bankruptcy, the receiver is the person appointed by the commercial court to represent the bankrupt person and the creditors in order to ensure its proper management. They are tasked with determining the bankrupt person’s assets and...

Debt recovery company

Debt recovery company A debt recovery company is an intermediary which assists a creditor with the recovery of its debt from a debtor. The main strength of a recovery company is its ability to manage problems amicably, i.e. without resorting to the courts. 99% of the...

Foreclosure

FORECLOSURE Foreclosure refers to the civil penalty imposed on a person whereby, upon expiry of the deadline legally granted to them to assert their rights in court, the right of action to which they were entitled for the recognition of those rights is extinguished....

Insolvency

Insolvency Insolvency is the state whereby a legal or natural person is unable to repay its creditors due to having insufficient assets. In the event of prolonged insolvency, a company then declares itself bankrupt, whereas a private individual is directed towards...

Factoring

Factoring Factoring is a financial management technique for a company to access immediate money without borrowing in the traditional way.  The beneficiary will transfer its fresh invoices (to clients) to the factor and will receive the invoices' face value (minus...

Essenscia Federation Chemistry and Life Sciences industries

Essenscia Federation Chemistry and Life Sciences industries With a 70 billion EUR global turnover, the Belgian Chemical sector represents 25% of all Belgian manufacturing activity. Base chemicals account for 39%, followed by pharma with 33% whilst the remaining third...

Acknowledgment of debt between individuals

Acknowledgment of debt between individuals An acknowledgement of debt between individuals is a document with which one person (called ‘debtor’) formally acknowledges owing a sum of money to another person (called ‘creditor’). This document must be entirely written by...

Debt collection department

Debt collection department The objective of the debt collection department is to manage all unpaid debt, such as invoices, debts and debt recovery within a public body or private company. In order to achieve its objectives and defend the interests of creditors, the...

Statute of limitation and Terms of prescription

STATUTE OF LIMITATION AND TERMS OF PRESCRIPTION The prescription system or statute of limitation is a system whereby a debt is extinct.  That means that the debt remains but it is extinct for tribunals and the payment cannot be enforced any more (the debt, being...

Declaration on oath

Declaration on oath A declaration on oath is a declaration by someone made with some kind of formalism and solemnity, in presence of an authority (judge, notary public, etc.) whereby the person certifies that he/she tells the truth regarding of a fact or series of...

Arbitration

Arbitration Arbitration is a form of alternative dispute resolution.  It aims at resolving disputes out of courts.  Avoiding courts has several benefits: the process is usually quicker and less expensive.  You can use it in any commercial (or private) dispute. In...

Credit Status report

Credit Status report It is essential for companies who sell goods and services to know if the buyer will be able to meet its financial commitment, that is its obligation to pay.  The credit status of a person or company is an evaluation of the capacity of a person or...

Sales and debt collection process

Sales and debt collection process Avoiding bad debts is helped by a systematic professional process in your company’s actions.  Sales and debt collection process are connected. All of your sales process elements need being vetted.  As a comparison, let’s say that the...

Debt collection costs Belgium

Debt collection costs Belgium When a debtor (client or buyer of goods or services) doesn’t pay his debt on time, that is by due date, then the creditor (supplier of goods or services) needs to take action.  The creditor can handle this in house or he can appoint a...

Alternative dispute resolution (ADR)

Alternative dispute resolution (ADR) When parties can’t find a solution to their dispute, it is tempting to go to courts.  Indeed, the judge will decide about the solution to the dispute and his solution can be enforced by the parties with the assistance of the Public...

Bailiff

Bailiff Bailiffs are Ministerial Officers in charge of the delivery of exploits and execute court orders such as the confiscation of goods. A ministerial officer is a person appointed by the King (in practice by the Public Federal Service Justice) and entrusted with...

Receivable

Receivable A receivable is an amount of money due to a party (the creditor) by another party (the debtor).  Both parties can be a company or a person. When both parties are companies, it is called a B2B receivable (Business To Business).  When the debtor is a person,...

Letter of demand, Summons, Default notice

Letter of demand, Summons, Default notice A letter of demand (LOD) or a dunning letter (example) is the written way for a creditor to require payment from his debtor.  The summons or default notice is a more formal text (Dutch: “ingebrekestelling”, French: “mise en...

Law on collection of uncontested debts

Law on uncontested debts (money claims) The 19th October 2015 law (« Pot-Pourri I ») includes a new procedure to enforce payment of uncontested monetary claims.  (The full text of this Law is available in Dutch or in French.) Is applicable to The law is restricted to...

Credit Management

Credit Management The term Credit Management embraces all activities and tasks aiming at getting invoices paid.  This includes prevention (implementing features designed to avoid bad payment – like solvency checks, credit limits, etc. – but also features intended to...

No cure no fee – No cure no charge

No cure no fee - No cure no charge No cure no fee, no cure no pay, no win no fee.  A service provider gets paid only after he delivered the expected results. For debt collection, this means that the debt collector needs to get the debtor to actually pay the debt. ...

Collection charge (fixed)

Fixed collection charge Why a collection charge? Generally speaking, clients pay their purchase within the terms agreed with the vendor. The latter takes no further delay in account in his price calculation.  When delaying payment, the buyer generates costs. What...

Interests on debts

Interests on debts Why pay interests on debts? When you borrow something (tool, car, house), you pay rent to compensate the owner for not having the usage of the item.  When the item is money, the rent is called interests. How are interests computed? Interests are a...

Debt collection costs: “No cure, no charge”

Debt collection costs: “No cure, no charge" “No cure, no charge”: Pay according to what you actually cash out of overdue receivables The no cure no charge system entails that we follow your fortune, that we have common interests.  The debt collector is bound to book...

Bankruptcy

Bankruptcy When a company cannot pay its creditors and cannot get hold of bank loans, it is in a state of bankruptcy.  Either the company itself or its creditors can apply for bankruptcy. A private person can also be declared bankrupt. Update 30/5/2016 Definitions...

B2B B2C

B2B B2C B2B en B2C are acronyms that refer to types of business relationship. B2C (Business to Consumer) is a situation where a business entity (a company) handles with a consumer (private person). -> Details on the law pertaining to B2C claims. B2B (Business to...

Credit management

Credit management A quick guide to credit management Whether you sell beans or aircraft carriers, you need to get them paid.  Fifty years ago, competition was cooler as demand was sustained and margins comfortable.  Credit management was not a strategic task for many...

DSO-Days Sales Outstanding

DSO-Days Sales Outstanding The Days Sales Outstanding provides the average number of days for a company to get its invoices paid. If your sales conditions are “30 days end of month”, your DSO should settle around 50 days (taking into account 45 days in theory where...

Law consumer debt collection

Law consumer debt collection The Belgian law on consumer debt collection is unfortunately not available in English. See also on this website: Costs consumer debt collection. See also on this website: Debt collection law Belgium. See also on this website: New Belgian...

Law late payment business transactions

Law on combating late payment in business transactions Full text of the Law late payment business transactions. Unfortunately, there is no English version. Updated 03/03/2016 Definitions provided under this section refer to the Belgian situation; unless specified...

Trustee – Agent – Representative

Trustee - Agent - Representative A person (the agent) who is authorized by a company or person ( the represented party = the principal) to act on behalf of the represented party. The principal is therefore bound by the acts and commitments of his representative....

Acid test ratio – Quick ratio

Acid test ratio - Quick ratio The Acid Test Ratio (or Quick Ratio) is a common measure for the capacity of a business to meet short term commitments. [current assets - (stock + work in progress)] / [current liabilities][Cash + Accounts receivables + Short term...

Annual accounts – Balance Sheet publication

Annual accounts - Balance Sheet A document that companies are required to submit annually to the National Bank of Belgium. This document provides a summary of the annual balance sheet including profit or loss situation. If a company doesn't submit this in time...

Glossary

You will find explanation on various words and concepts related to debt collection and credit management in this section. The subjects are listed in the column on the left side. Click on a subject.

The texts are meant to summarize concepts in daily language and should not be considered as comprehensive or definite. We welcome suggestions for modifications or additions at glossary@tcm.be.

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