This Policy is made in terms of Section 96 of the Municipal Systems Act, 2000 (Act 32 of 2000) and the Mogale
City Local Municipality: Credit Control Bylaws
WHEREAS section 152 (1) (b) of the Constitution of the Republic of South Africa Act 108 of 1996 (‘the
Constitution) provides that one of the objects of local government is to ensure that the provision of services to
communities occurs in a sustainable manner;
AND WHEREAS section 153 (a) of the Constitution provides that a municipality must structure its administration,
budgeting and planning processes to give priority to the basic needs of the community, and to promote the social
and economic development of the community;
AND WHEREAS section 195 (1) of the Constitution provides that the public administration must be governed by
the democratic values and principles enshrined in the Constitution, including-
• The promotion of the efficient, economic and effective use of resources;
• The provision of services impartially, fairly, equitably and without bias; and
• The fact that people’s needs must be responded to.
AND WHEREAS section 4 (1)(c) of the Local Government: Municipal Systems Act 32 of 2000 provides that the
Council of a municipality has the right to finance the affairs of the municipality by charging fees for services,
imposing surcharges on fees, rates on property and, to the extent authorised by national legislation, other taxes,
levies and duties;
AND WHEREAS section 5 (1) (g), read with subsection (2) (b), of the Systems Act provides that members of the
local community have the right to have access to municipal services which the municipality provides provided
that, where applicable and subject to the policy for indigent debtors, pay promptly for services fees, surcharges
on fees, other taxes, levies and duties imposed by the municipality;
AND WHEREAS section 6 (2) (c), (e) and (f) of the Systems Act provides that the administration of a municipality
must take measures to prevent corruption; give members of a local community full and accurate information
about the level and standard of municipal services that they are entitled to receive; and inform the local
community about how the municipality is managed, of the costs involved and the persons in charge;
AND WHEREAS Chapter 9, sections 95, 96, 97, 98, 99 and 100, of the Systems Act provides for Customer Care
Management, Debt Collection responsibility of the municipality, contents of the Policy, Bylaws that give effect to
the Policy, Supervisory authority and Implementing authority.
IT IS HEREBY ADOPTED: a COLLECTION POLICY: ARREAR DEBTOR ACCOUNTS of the Mogale City
.2 PURPOSE OF THE POLICY.
4. POLICY OBJECTIVES.
6. KEY CREDIT CONTROL AND DEBT COLLECTION.
7. CREDIT CONTROL EMPLOYEES ACCOUNTS.
8. CREDIT CONTROL COUNCILLORS ACCOUNT.
9. COMMUNICATION WITH OTHER STAKEHOLDERS.
10. CLEARANCE CERTIFICATES.
II. COLLECTIONS OF RENTALS.
12. CLIENTS CARE AND DISPUTES.
13. PENSION REBATE.
14. REPORTING AND PERFORMANCE MANAGEMENT
15. APPLICATION OF THE POLICY.
16. INCONSISTENCE WITH THE POLICY
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1.1 Debt Collection is the execution of functions necessary to collect unpaid income of the municipality, owed
by clients who are debtors.
1.2 Credit Control is the limiting of further sales of services to debtors in arrears and the negotiation for payment
in exchange for normalising further service delivery.
1.3 Accounts mean the municipal account for services rendered and for assessment rates levied by the
1.4 Due date means the date indicated on an account statement by which time payment of the amount on the
statement is required.
1.5 Residential household means a debtor of whom the tariffs for all the levies for services and rates are
1.6 Indigent means a debtor whose whole household has been evaluated in terms of the Indigent Policy and
who is registered as being indigent.
1.7 MSA means the Local Government: Municipal Systems Act no. 32 of 2000
2. THE PURPOSE OF THE POLICY
In order to sustain the local governance and continued service delivery, the collection of income levied on
account statements submitted to debtors (current accounts) must be realised within a turnover rate not exceeding
30 days. Payment of arrears must also be addressed sufficiently for the main categories of debtors in order to
minimise arrear debtors.
This policy serves to clearly document the key elements of Credit Control and Debt Collection to be implemented
within the jurisdiction of Mogale City Local Municipality and interventions to be implemented for non-compliance
with the policy.
The Credit Control function is divided into Payment Demands, Cut-offs, Arrangements, Reconnections and Legal
functions. The “Cut-offs” functions include services restrictions, follow-up on non-responses, no deposits and
low consumption cases. Other component functions of credit control are indigent management and refunds of
The Debt Collection function includes the issuing of reminder letters, arrangements, summonses, telephone
collections and hand-overs. The Legal functions deals with Attorneys and Collection Agents on hand-over
matters as well as administration of deceased and insolvent estates, administration orders and inactive accounts
with the related arrears write off.
4. POLICY OBJECTIVES
4.1 The objectives of this policy are:
(a) To maximize revenue by timeously collecting all moneys owed to the municipality.
(b) To ensure that action taken to recover arrear debt is warranted and fair.
(c) To enable Mogale City Local Municipality to develop and maintain a sustainable service delivery
relationship with its customers.
(d) To deliver excellent service to the communities of Mogale City Local Municipality in return for payment
of their rates and service accounts.
4.2 These objectives are achievable if the following outcomes are met:
(a) All current service accounts in Mogale City are fully paid-up.
(b) Suitable, sustainable agreements are reached with all account holders who have outstanding
accounts with an age analysis of longer than 60 days.
(c) Relevant, accurate and complete details of account holders are collected during the opening of
(d) Account holders ensure that when their details change, Mogale City Local Municipality is timeously
(e) Persons liable for payment receive regular, accurate and timeous accounts that indicate the basis for
calculating the amount due, at their postal address.
(f) A good customer relationship is established and maintained between the Council and each account
(g) Customer Care and revenue staff is skilled in the principles of Batho Pele, communication and
effective negotiation techniques.
(h) Full enforcement of the Credit Control and Debt Collection Policy.
(i) The engagement of a reputable Debt Collection Agency with the backing of legally enforced Debt
(j) The engagement of a reputable Credit Control Agency.
(k) Creation and ongoing maintenance of an Indigent Database.
5.1 Non-payment of their accounts by debtors has a direct negative impact on the municipality’s ability to
provide high quality service delivery to its clients.
5.2 Current levies not paid by the indicated due date are subject to Credit Control and Debt Collection
measures. The right of access to services, and consumption thereof, can only be exercised by residents
who are not in arrears on their municipal services accounts or who have arranged to pay their arrears in
terms of this Policy.
5.3 Various methods of payment by debtors as well as sufficiently convenient payment points are available.
5.4 Interest on debt in arrears is levied monthly at the rate specified in item 6.12 of this policy.
5.5 Interest is levied on all arrears of 30 days and older. Interest levied but not paid is included in the arrear
amount of such a debtor.
5.6 Credit control measures are applied with pro-active reminders or warnings. Account statements are
regarded as notification of the arrears status of the account as well as stating the intention to take credit
5.7 Metered services consumed by an unknown/ unregistered consumer/ and or tenant/s are billed to the owner
of the property to which the service connection is registered.
5.7.1. Only one account for all municipal levies and services charges relating to any property will be opened and
submitted to the owner of such property with the exception of business and industrial accounts, except in
the case of those properties with multiple consumers, each such consumer being separately metered by
the municipality for electricity and /or water consumption. Municipality may open tenants account only for
consumers who are approved as indigents to allow them to benefit from the indigent program, and a
permission letter from the owner will be required.
5.7.2. Consumers who rent properties with multiple consumers, each such consumer being separately metered
by the municipality for electricity and /or water consumption, and are billed separately for such services,
must enter into a services agreement to have access to these services. No service agreement shall be
concluded without the written consent of the registered owner of the property and that consent should be
in form of a letter from the owner together with the lease agreement between the owner and a tenant and
such an owner shall have no right to discontinue the services or finalize the account of their tenants unless
tenants account is owing and or the lease agreement expired. The owner of the property remains liable for
all charges raised on the property irrespective of whether such property is rented or not.
5.8 Refusal by banks to honour payments by cheque or debit order is regarded as non-payment, upon which
the relevant debtors are subject to credit control measures.
5.9 Clients who make no further use of any services but still owe an amount are considered inactive debtors
and are subject to the normal credit control and debt collection process.
5.10 Debtors who are large consumers of services are managed by telephonic and personal contact with them
on a higher management level, e.g. corporate business and government departments.
5.11 Residential household debtors form a distinct group for whom the following special measures and
5.11.1 Water supply to defaulting residential household debtors will not be completely discontinued, but
rather be restricted due to hygienic reasons. Other types of debtors who are in default and whose
water supply is involved will be completely deprived of the service.
5.11.2 Any interest free arrangements for payment of arrears are intended to assist those debtors by
making their current monthly accounts more affordable.
5.12 If it is necessary to disconnect any service in terms of this Policy, the free cross-subsidized portion of that
service in terms of the municipality’s tariffs for service delivery, will also not be available for as long as that
service is to remain disconnected.
5.13 All information furnished on the application form may be verified by the Municipality or its authorized
representative with any or all data information institutions, credit information bureau and any financial
institutions as may be deemed necessary by the Municipality in determining the applicant’s credit
5.14 The Municipality reserves it rights to share bad payment behaviour as determined from time to time.
6 KEY CREDIT CONTROL AND DEBT COLLECTION PROCESSES
6.1 Application for new connection
Application for new connections can only be made by property owners and in the case of a business their
tenant/s, is to obtain written consent and authority from the owner, accompanied with a written lease
agreement, positive identification and company registration documents of both the owner and the tenant.
Applicants must complete the prescribed “Rendering of Consumer Agreement” forms in order to obtain a
new connection. A new connection fee, determined in terms of the municipality’s current Rates and Tariff
Policy is payable. All new applications will be evaluated and the deposit for consumers with high risk will
be increased. In certain cases additional security from prospective consumers may be required. The owner
of the property remains liable for all charges raised on the property irrespective of whether such property
is rented or not. The Tenant as well as the owner is jointly and severally liable for all charges on the
property. The Municipality reserves the right to disconnect the services of tenant if the owners account is
Deposit for businesses and industrial consumers may be reviewed annually and, if need be due to an
increase in their consumption, be increased to three months consumption based on the latest accounts.
Businesses and industrials that have defaulted may be debited with an additional deposit of two months of
their latest consumption. Businesses and industrials found not to have paid an initial deposit will be charged
a deposit of three months consumption based on the tariff applicable when the account was opened and
thereafter be reviewed annually as stated above.
Guarantees are not accepted for deposit payment.
Consumers will receive monthly statement/s with an indicated payment due date. The statement shall
contain messages of events within the municipality from month to month. Ratepayers/consumers who have
not received an account for a specific month on or before the last day of the month, is to pay not less than
the average of the previous three months’ accounts and to notify the Municipality in writing within 7 (seven)
days. Non-receipt of an account does not exempt one from the liability of payment. It is the responsibility
of the ratepayers/consumers to furnish the Municipality with updated information and contact details.
6.3 Estimated Consumption:
The municipality may levy an estimate of the consumption of water or electricity for any relevant period if:
(a) No meter reading could be obtained in respect of the period concerned; or
(b) No meter has been installed to measure the consumption on the premises concerned.
(c) Both residential and business/industrials customers who are found to have illegally connected
municipal services at their properties will be charged a penalty per approved tariffs in addition to the
estimate of consumption in terms of the approved municipal tariffs.
The customer concerned is liable for payment of the fee in terms of the municipality’s approved tariffs for
service delivery in respect of such estimated consumption.
(d) In instances where there may be any issue in relation to billing of water, a faulty meter, no meter
installed and/or a tampered/breached/bypassed meter, water consumption of 36 kl per month
shall be deemed to be consumed by households in line with the municipality’s approved tariffs, in
the event that no recent and reliable actual average consumption can be determined.
Water and electricity readings received from consumers by email or telephone shall not be permitted for a
period of more than 3 consecutive months. Meter readers from the Municipality are to be allowed access
to all meters.
The municipality may, in accordance with the provision of section 102 of Systems Act -
(a) consolidate any separate accounts of a customer liable for payments in terms of the By-laws of the
(b) Hold any amount paid by a customer, which is in excess of an existing debt, in credit for the customer
in anticipation of future rates and fees for municipal services owing. Refund on credit balance due to
faulty billing or meter reading on active accounts will be limited to the amount paid by the
consumer for a period of five months.
(c) The municipality will not refund client/s or consumer/s for payment made through the
application of clearance certificate once the clearance certificate is issued to the client or consumer
concerned. Defaults on arrangement made in terms of section 118 of the Systems Act of 200 are
subjected to disconnections.
(d) Submit only one account for all municipal levies and services to the owner of such a property and to
distinguish between various individual debtors or debtor types in this regard.
(e) No refunds will be made in respect of customers that overpay their accounts on an on-going basis
or pay their accounts into a credit, creating the impression of a savings account.
No interest will be payable on any deposit held or any credit amount including that contemplated in
paragraph (b) above
6.4 Credit Control Measures/actions
6.4.1. The following Credit Control Actions may be used, but are not limited to, to enforce the payment of the
18.104.22.168. The sending of a reminder message via SMS;
22.214.171.124. The sending of an email reminder message;
126.96.36.199. Telephonic calls to request payment;
188.8.131.52. The delivering of a notice of arrears/letter of demand demanding payment where
either water, electricity and other municipal charges are in arrears, which notice may
include notification of disconnection/restriction of water supply and electricity
184.108.40.206. The disconnection of the electricity supply, whether prepaid or conventional, to any
property where either water, electricity and/or any other municipal charges are in
220.127.116.11. The disconnection of the water supply, whether prepaid or conventional, to business
properties where either water, electricity and/or any other municipal charges are in
18.104.22.168. The restriction of water to residential premises, whether prepaid or conventional, by
installing a device that limit the water flow to 6 kilolitres per month at the cost of the
consumer where either water, electricity and/or any other municipal charges are in
22.214.171.124. All accounts in arrears in excess of 60 days may be handed over to debt collection
agents/attorneys for institution of legal proceedings through a competent court with
the requisite jurisdiction, against the debtor.
126.96.36.199. The consumer’s name may be made public by handing over the account to the credit
bureau for blacklisting/default listing/trace alert listing/slow payer listing, and/or any
other listing available to the Municipality or its service provider.
188.8.131.52. Any accounts, other than Government departments that render essential services,
which are due and owing will be subject to cut off, disconnection or restriction of
184.108.40.206. In those instances where prepayment meters for service vending are installed, the
municipality may block the vending of services to consumers of services on
properties where arrears are owed for other municipal services or levies.
6.4.2 Notice of arrears/Demand for payment
The Municipality or it’s duly appointed attorney/debt collector may serve a warning notice/notice
of arrears/letter of demand, after the due date, as per Section 115 of the MSA advising that that
the account has not been paid and/or is in arrears.
This notice is to be delivered on the debtor or the property concerned, calling upon the debtor to
pay the debt or enter into a payment arrangement with the Municipality, within 7 (seven) days of
receipt of such notice, failing which legal proceedings will be instituted for the recovery of such
debt plus legal costs on an attorney and own client scale, as well as an order attaching the
debtor’s movable and/or immovable property to recover the outstanding debt.
This notice may state that in the absence of payment or an accepted payment arrangement
services to the client will be restricted and/or disconnected, without further notice.
The notice may contain the following:
220.127.116.11. The amount in arrears;
18.104.22.168. That the consumer may conclude a payment arrangement with the Municipality
for payment of arrears amount in instalments as provided for in this policy;
An administrative fee will be levied and debited against the account of a customer in terms of the
tariff approved and set by the Municipality, in respect of any action taken in demanding payment
from the customer or reminding the customer by means of notice delivered by mail, hand or any
other electronic means available, that the account is arrears.
6.4.3 Electricity disconnection (level 1) and Water restriction
In the absence of reaction on the 7-day reminder, the electricity supply to the debtor is
discontinued together with the notice for the reason of the discontinuance. The account of the
debtor is debited with the cost of the level 1 admin fee at the approved tariff of the municipality.
The municipality reserves the right to charge cost or admin fee irrespective of whether the actual
action took place or not.
In the absence of reaction to the disconnection of electricity, in cases where the debtor has a
consolidated account including water consumption levies, a disconnection (restriction for
residential consumers) of water is carried out at the consumption address and a notice is left at
the premises. The account of the debtor is debited with the cost of this action at the approved
tariff of the municipality.
In the absence of reaction on the 7-day reminder, in cases where the debtor has an account for
water consumption levies but not for electricity, a disconnection (restriction for residential debtors)
of water is carried out at the consumption address after the 7-day period, and a notice to that
effect is left at the premises. The account of the debtor is debited with the cost of this action at
the approved tariff of the municipality.
6.4.4 Electricity disconnection (level 2) and Water restriction
In the further absence of reaction on the level 1 cut-off of electricity, the level 1 cut-off is inspected
after 7 days to ensure that the service is still discontinued. If the electricity is found on, it is again
discontinued with the relevant notification, but then via a more expensive procedure to ensure a
more tamperproof disconnection. The account of the debtor is debited with the higher cost of the
level 2 cut-off at the approved tariff of the municipality. The municipality may also opt to install a
prepayment type electricity meter at the cost of the consumer or owner of the property and to then
restrict the consumption of vending to the meter until the requirements of the municipality are met
by the owner or consumer.
In cases where the debtor has a consolidated account that includes water consumption levies,
the water supply is also disconnected (restricted for residential consumers) together with the level
1 electricity cut off inspection and a notice to that effect is left at the premises. The account of the
debtor is debited with the cost of this action at the approved tariff of the municipality.
6.4.5 Illegal reconnection/tampering of electricity
If consecutive follow-up actions due to no reaction by the debtor reveal that illegal consumption
of the service occurred or a disconnection has been tampered with, the service connection is
removed and evidence against offenders is filed on an investigation document.
6.4.6 Illegal reconnection/tampering of water
The water disconnection/restriction is monitored and followed up in cases of absence of reaction
by the debtor to ensure that an illegal reconnection has not occured.
Interference with restriction at water service points will lead to the removal of such a service
connections. Where the services connection is removed, the consumer will be charges with costs
of the action in terms of the council’s tariff structure.
Any first time discovery of tampering with a restriction device or service connection at the address
of a consumer leads to restriction of the water flow rate to the quantity of the monthly free water
allocation to residential households. Any further tampering after such a restriction will lead to the
prosecution of the offending debtor.
6.4.7. Consumer who claims to have been wrongfully cut off should report such to the Municipality within
two days, failure to do so, Municipality shall not be held responsible for any losses incurred by
the consumer. Consumers who suffered losses due to wrongful disconnection should produce a
proof of her/his losses to the Council so that an investigation can be undertaken.
6.4.8. For consumers who buy water and electricity from the prepaid vending machine, the municipality
may limit the amount of vending for consumers with outstanding accounts and/or take thirty (30)
percentage of the amount vended to settle the arrears.
6.5 Reinstatement of Municipality Services
6.5.1 The municipality must reinstate full levels of provision of any electricity or water service terminated
or restricted after -
(a) the full amount of arrears has been paid, or
(b) an agreement for payment of the arrears contemplated has been entered into in terms of
this Policy, or
(c) the full amount of arrears in respect of any agreement entered into, and any increased
deposit, have been paid, or any additional security required has been provided, and
(d) any other condition of the Policy that the municipality may consider appropriate has been
(e) Reconnection of service will be done within 48 hours
6.5.2 Reconnection of services
Where services are disconnected as a result of the application of this Policy, these services can
only be reconnected under the following circumstances:
(a) Water supply restricted for non-payment by clients, can only be normalised after either
receipt of the amount in arrears or conclusion of a settlement arrangement for payment of
the arrears in terms of this Policy.
(b) Water supply which has been restricted due to non-payment will only be normalised after
either full payment of the arrears, or upon receipt of an appeal for normalisation due to a
good payment record of three (3) months on the repayment contract and the current monthly
levies. The Manager Credit control will receive and evaluate each appeal before
(c) Electricity supply discontinued due to non-payment can only be reconnected after receipt of
the amount in arrears or the conclusion of a settlement arrangement for payment of the
arrears in terms of this Policy.
(d) Any services which are discontinued as a result of tampering with the Municipality’s
distribution networks and/or mechanisms can only be legally reconnected if a Court orders
ALTERNATIVELY: i f the affected client admits in writing that he/she permitted or committed
the tampering and undertakes to not repeat the action and concludes a settlement
arrangement for payment of the reconnection charges and arrears in terms of this Policy,
service reconnection can also be made. Such written admission will be kept on the case
document for future use in case of repeated tampering.
6.5.3 Reconnection or reinstatement of services will be done within 48 hours.
6.6 Termination of Service Agreements
6.6.1 A customer must terminate an agreement with the municipality for the provision of any municipal
service by notice in writing (completing the relevant service discontinuation and account closure
forms of the municipality) not less than seven working days before the time.
6.6.2 The municipality may, subject to compliance with the provisions of the relevant By-laws and any
other applicable law, terminate the agreement for the provision of a municipal service to a customer,
by notice in writing of not less than 14 working days, if the customer-
22.214.171.124 has not used the municipal service during the preceding six months and has not made
arrangement to the satisfaction of the municipality for the continuation of the relevant
126.96.36.199 has made an arrangement with another service provider to provide the municipal service
concerned to the customer; or
188.8.131.52 has vacated the premises to which the agreement concerned relates.
6.7 Illegal Connections and Meter Tampering
When it is ascertained that a meter has been tampered with, the cost of repairing or replacing an existing
meter with another one will be charged to the account of the respective customer in terms of the
municipality’s tariff structure. The municipality can also opt to close the consumer’s account in such
instances and levy all municipal charges related to the property on the owner’s account. The full
outstanding balance is immediately payable before services will be restored.
In addition, where a meter has been tampered with or where there has been unauthorized consumption of
water or electricity, the municipality shall remove the connection and the cost of this action will be charged
to the account of the customer, and a criminal case may be opened with the Competent Court of law and
the client charged with illegal consumption/connection in terms of the approved municipal tariff. In a case
where the meter is inside the house or the yard, it shall be moved outside and the costs will be borne by
the customer/s or a pre-paid meter must be installed at the owner’s expense.
6.8 Free Basic Services
The municipality will only provide free basic services to indigent domestic debtors on a monthly basis in
quantities as determined from time to time in line with the Indigent Policy.
For indigent households only, the six kiloliters (6kl) free basic water will be provided per meter connection.
For indigent households only , the six kilolitres (6kl) free basic water will be provided per living unit in a
residential complex with metered or unmetered and sewer connection, meaning registered sectional title
units/townhouses, life rights complexes, old age home, block of flats and excludes formal or informal
granny’s flats and backyard rooms, provided those units in a flat or complex have their own individual
meters and those meters belong to the municipality not Body corporate or Home owner’s association,
except in the case where all residents are approved indigents
6.9 Indigent Assistance Scheme
An account holder may apply to the municipality, in the prescribed manner, to be declared indigent. Indigent
customers are not excluded from this Policy.
6.10 Estates Accounts Collection
6.10.1 Estates with legal status
The accounts of debtors who are declared as insolvent or liquidated, under administration or deceased
are dealt with according to normal legal practices by the collection staff of the municipality and may be
handed over to the Municipality’s debt collectors and/or attorneys for legal action and recovery.
Unsuccessful claims in terms of liquidations and insolvents are recommended to Council for possible
6.10.2 Estates without formalized legal status
In many cases the head of a household has passed on without leaving a will/final testament indicating to
whom ownership of the family residence is to be transferred upon the event of his/her death OR the
owner of the property has abandoned his/her family to fend for themselves. These scenarios are not
provided for in the normal legal practice, which necessitates the following process in Mogale City Local
The remaining family must report the situation to the municipality’s collection office, who will require the
relevant documentation to be obtained by the family, i.e. a death certificate and an order of the local
Magistrate allocating right of ownership and or possession to someone of the surviving family in the case
of a deceased estate OR an order of the local Magistrate allocating right of ownership to someone in the
In all of these cases, extension for the payment of the accumulated arrears as at the date of notification
will be granted by the debt collectors in the collection office, disconnected electricity will be reconnected
and the remaining family must then pay all amounts levied on monthly current accounts in excess of the
amount of the payment extension until such time as the matter has been finalized. This will prevent any
further service restrictions/cut offs or collection actions at the residence whilst the family is in process of
legalizing ownership of the property. The account may be handed over to the Municipality’s debt
collectors and/or attorneys for legal action and recovery.
As soon as the right of ownership or possession has been officially allocated by the Magistrate, the
documentation must be presented to the municipality’s collection office, which will then change the name
of the account to that of the new owner upon receipt of the notice from the attorneys and deeds office.
They will also encourage the new owner/tenant to make an arrangement for the payment of the arrears
to prevent credit control and collection actions from being taken by the Municipality.
ALTERNATIVELY , if the family qualifies to be registered for assistance in terms of the municipality’s
Indigent Policy, they can apply to be registered and after registration to enjoy the benefits offered in terms
of that Policy regarding the arrears.
Amounts claimed and not successfully collected are submitted to the Council for approval to be written
off against the reserve for bad debt.
6.11 Revenue Recovery Methods
6.11.1 Where the letter of final demand/arrears notice and/or the termination of services yield no
response, the account may be handed over to external debt collectors and/or attorneys for
collection. Government accounts will not be handed over to external debt collectors or attorneys.
6.11.2 Liability for Rates and Municipal charges: If an amount due for rates and other municipal charges
is unpaid by the owner of the property, the municipality may recover the amount from the tenant
or occupier of the property. This amount due may also be recovered from the agent of the owner.
The Council reserves the right to hand over any debt irrespective of its aging.
6.11.3 In-house Collections
184.108.40.206 In-house Debt Collection may include the listing of the debtor with the Credit
220.127.116.11 Where there is no response, the accounts may be handed over to external debt
collectors and/or attorneys.
It should be noted that the issuing of summons internally will depend on the capacity of the
municipality in terms of personnel.
6.11.4 External Debt Collection with the assistance of an Attorney
18.104.22.168. Accounts that remain outstanding after internal credit control measures and are 61
days and above; as well as accounts that have an outstanding balance due and
owing after payment of clearance figures in terms of Section 118 (1) of the MSA;
may be handed over to Mogale City Local Municipality’s Debt Collection
Agency/Attorneys for collection and to attend to matters that are defended.
6.12 Payment Terms and Interest Charged on Outstanding Accounts
6.12.1 Normal Terms: All categories of consumers are required to effect payment of their rates and
services accounts on or before the due date advised on account statements.
6.12.2 Interest at the prime bank lending rate is charged on all consumer accounts or portions of
accounts which are not settled / paid on due date.
NOTE : For this purpose, the prime bank-lending rate of the municipality’s banker at the start of
the financial year of the municipality will be applicable for the entire financial year. This means
that the interest rate will be changed on the debtor system once in every financial year.
6.12.3 Payment/s or amount/s received will be allocated at the discretion of the Municipality against any
amount owed to the Municipality.
6.12.4 The amount handed over will cease to attract interest
6.12.5 Consumers who settle their account within 12 months will receive hundred percent
interest write off as an incentive. The municipality may over and above the interest write
off, consider writing off an amount of no more than sixty percent of admin fees and charges
for consumer who settle their outstanding account/s.
6.13 Payment methods and Dishonored Cheques
Payments for accounts must be received on or before the due date at a Municipal pay-point by the close
of business. In the case of any electronic payments or payments via agents, the money must be received
in the municipal bank account before the due date and not later than the close of Business. Payments are
only deemed as received once they have been receipted on Council’s Financial System. If any payment is
dishonored, the municipality may levy costs and administration fees against the account of the defaulting
customer at the prescribed rate. Council reserves the right to refuse any payment method that has been
previously dishonoured. No cheques will be accepted as payment of an account.
6.14 Arrangement and payment extension
6.14.1 Arrangement to pay arrear account balances will be considered for Industrial, Business and
School accounts but limited from six to ten months period and an initial payment of 50% of the
outstanding debt is required. This also applies to churches and non-profit organizations, with only
actual service charges being billed. Payment extension for the current account may not be
6.14.2 Proposals for arrangement to pay arrear account balances on domestic accounts and sundry
loans will be considered, provided the following conditions are met: This will be applicable to
tenant and owner consumers. Tenants should obtain letter from the owner granting them
permission to enter into an arrangement
22.214.171.124 An appropriate initial down payment of the arrear amount is payable on conclusion
of the arrangement and is based on the following: The initial payment is not
applicable to staff members of Mogale City Local Municipality.
• Net salary range earned by the consumer:
Income Range Deposit
o R 1 000 - R 5 999 25 % of the outstanding debt
o R R6000-R12 999 35%
o R R13000- R R29 999 50%
o R R30 000 and above- R 60%
• Exceptional cases may be referred to the Manager: Credit Control for consideration.
The Manager can take a decision on certain cases which may not necessarily be
consistence with this policy.
126.96.36.199 The salary advice as well as proof of the initial down payment must be attached to
all arrangement, which have been concluded, in order for the agreed arrangement
to be implemented.
188.8.131.52 The debtor is to make full payment of the current account and charges while
simultaneously paying the arrears as per the terms of payment
arrangement/acknowledgement of debt.
184.108.40.206 Should the debtor fail to make payment of charges on the current account, or any
part thereof, the customer shall be in breach of the payment arrangement, in which
instance the full amount then outstanding will become due and payable
forthwith, without any further notice.
220.127.116.11 In special circumstances and where the customer could not have reasonably
prevented the default on the account, the municipality may, in its discretion allow
a payment period of not more than 36 months. The Municipality is duly authorized
to take into account any information and/or documents and/or the history of the
account in the consideration of the extended payment arrangement and request.
18.104.22.168 Documentary proof and supporting documents must be furnished by a customer
upon application for a payment arrangement and/or on request by the Council. The
following documentation may be required, where applicable, upon application of
the payment arrangement and/or signature of the acknowledgement of debt:
a) Motivational letter clearly setting out reasons for a payment arrangement;
b) Owner’s and/or tenant’s (if applicable) identification documents;
c) Owner’s and/or tenant’s (if applicable) salary advice;
d) Spouse’s salary advice (if married in community of property or joint owner of
e) Pension card;
f) 3 months bank statements;
g) List of assets and liabilities;
h) List of income and expenditure;
i) Approval letter from the owner of the property, if an arrangement by a tenant
j) If there are joint/co-owners to a property and if either the owner or the tenant
is married in community of property the spouses documents are required.
k) Any other document/s and/or information that may be deemed necessary by
22.214.171.124 Acknowledgement of debt and arrangement agreement forms must be completed
fully and signed by the customer himself/herself and all documents required must
be submitted before the arrangement can be approved.
126.96.36.199 The total arrear amount which is subject to the agreed arrangement will cease to
attract interest if the arrangement is honored. If, however, the arrangement is
dishonored, interest will be levied and the whole outstanding amount becomes due
188.8.131.52 Special arrangements on arrears are treated as a once-off opportunity to account
holders who have fallen into arrears. Individuals who did not honor a previous
agreement will therefore not be considered for a new agreement, unless
exceptional circumstances are found to have existed.
184.108.40.206 Agreements may not be concluded with customers who respond only after being
handed over to attorneys for collection.
220.127.116.11 Should a customer have multiple properties then separate payments
arrangements and acknowledgement of debts are to be concluded in respect of
18.104.22.168 Arrangements are authorized and approved by Assistant Managers and
6.14.3 Businesses placed under provisional or actual liquidation, businesses under business rescue,
and individuals under debt review will only be allowed to purchase services on a pre-payment
basis, if possible. Prepaid meters will not be installed if there is an outstanding balance on the
account/s, unless an arrangement is made to settle the arrears. Customers who are indebted to
the municipality for rates and services and wish to submit building plans for approval will first have
to make an arrangement to pay off their arrears before such plans can be approved. Only bank
guaranteed cheques or cash payments for such rates and services will be accepted.
6.15. Unallocated receipts will be allocated to income after three years.
6.16 The arrangement for the following categories of consumers may be allowed more than 48 months and
current accounts to be paid in full
• Under debt review, administrations and late estate
6.17. Consumer/s who fail to honour their payment arrangement may be subject to emolument attachment
to their salaries.
6.18. The municipality may not pay its suppliers invoice, if they owe municipality for services or such a
payment may be set off against the supplier’s municipal account.
7 CREDIT CONTROL AND DEBT COLLECTION OF EMPLOYEE ACCOUNTS
S10 states that .... “a staff member of a municipality may not be in arrears to the municipality for rates and
service charges for a period longer than 3 months, and a municipality may deduct any outstanding amounts from
the staff member’s salary after this period.”
Employees of the Municipality shall be subject to disciplinary hearings, as per the Municipal Systems Act (No 32
of 2 000), Schedule 2 S10, if they are found to be in arrears.
Payment of arrear amounts by staff may be extended to a maximum of 42 months in exceptional circumstances
in order to deal with previous accumulated arrears and within the prescripts of the Basic Conditions of
Employment Act. Thereafter no further arrears may be accumulated.
In order to ensure timeous, assured payment of employee accounts, all employees residing within the Mogale
City Local Municipality shall be subject to an automatic deduction instituted against their salaries should the
account be in arrears for more than 3 months.
8 CREDIT CONTROL AND DEBT COLLECTION OF COUNCILOR ACCOUNTS
The Local Government Laws Amendment Act (No 51 of 2002) states that Municipal Councilors may not be in
arrears to the municipality for rates and services for a period longer than 3 months. In addition, in terms of the
Municipal Finance Management Act (No 56 of 2003), SI 24 (b).
“The notes to the annual financial statements of a municipality must include particulars of . any arrears owed
by individual councilors to the municipality . for rates or services and which at any time during the relevant
financial year were outstanding for more than 90 days, including the names of those councilors .”
In order to ensure timeous, assured payment of councilor accounts, all councilors shall be subject to an automatic
deduction instituted against their councilor allowance payments on a monthly basis should the account be in
arrears for more than 3 months.
9 COMMUNICATION WITH COMMUNITIES AND OTHER STAKEHOLDERS
On approval of the new policy, a comprehensive communication plan will be implemented through the Marketing
and Communication Division, in conjunction with the relevant Departments, in order to advise ratepayers and
consumers regarding incentives, payment terms and arrangements in the following languages: Afrikaans,
English, Sotho/Tswana, and Xhosa/Zulu. This will be done in conjunction with the ward committees.
10 CLEARANCE CERTIFICATES
10.1. In order to effect transfer of a property, legislation, the municipality and the deeds office requires a
clearance certificate to be obtained. A clearance certificate can only be issued once the municipality
receives payment for monies owed in respect of municipal service fees, surcharges on fees, property rates
and other municipal taxes, levies and duties outstanding. Provision is to be made in the clearance
calculation for the period between the date of application until transfer of the property. No transfer can take
place without such a certificate.
10.2. Upon a request for clearance figures in terms of Section 118 (1) of the MSA, the Municipality is to furnish
the figures which is to reflect, include and specify all amounts that became due for municipal service fees,
surcharges on fees, property rates and other municipal taxes, levies and duties during the two years
preceding the date of application. Provision is to be made in the clearance calculation for the period
between the date of application until transfer of the property.
10.3. Any application for clearance figures, is to be accompanied with the following information and supporting
a. A copy of the Sale Agreement, in the event of a private sale;
b. A copy of the Terms and Conditions of Sale, in the event of a property purchased by way of
c. Certified identification documents of the seller/s and purchaser/s. In the event that the seller or
purchaser is a juristic entity, certified copies of the company registration documents are required;
d. Full contact details of both the seller/s and purchaser/s are required, including telephone numbers,
telefax, and email addresses;
e. Proof of residence of both the seller/s and purchaser/s not older than 3 months. In the event that
the seller or purchaser is a juristic entity, proof of the current business address and principal place
of business is required;
f. Information regarding the bond account, in the event of a property purchased by way of
g. The market value of the property, in the event of a property purchased by way of
h. The applicant’s attorneys full contact details together with the power of attorney to act is required.
i. Any other document/s and/or information that may be deemed necessary by the Municipality.
10.4. Once the clearance figures are paid in terms of Section 118 (1) of the MSA, the Municipality is to issue the
clearance certificate as soon as reasonably possible.
10.5. Should any amount be outstanding once clearance figures in terms of Section 118 (1) of the MSA is
calculated, the Municipality has the discretion to either:
10.5.1. Accept a payment arrangement and obtain a signed acknowledgement of debt as per the terms
provided for in this policy; and/or
10.5.2. Accept an irrevocable guarantee from the Conveyancing Attorney that once payment of the
purchase price is received, the full outstanding amount will be paid to the municipality prior to the
proceeds being distributed; and/or
10.5.3. Instruct a debt collection agency and/or attorney to proceed with legal action for the recovery of
the outstanding balance from the responsible entity/party.
10.6. Rates Clearance Certificates:-
10.6.1 Will be valid for 60 days;
10.6.2 No extension on a clearance certificate will be granted, if it expires a new application for clearance
figures must be made; and
10.7. All payments / credit that remain on the account after registration of transfer will be allocated to the
registered sellers, other municipal accounts where applicable and all refunds if any will be made to such
seller only upon application by the conveyancing attorneys on the prescribed form.
11. COLLECTION OF RENTAL (INCLUDING HOSTELS)
11.1 Rental is payable in advance on or before the due date.
11.2 If payment is not received, a first contact letter (Final Demand) requesting payment and offering the
debtor an opportunity to make an arrangement within 7(seven) days, from the date of the letter, is sent
to the defaulting debtor.
11.3 If the debtor fails to respond to this letter of demand, the debtor will, within the next 30 (thirty) days,
receive a house visit from an official from the Housing Section.
11.4 Failure to respond within 7 days after the house visit, may result in legal proceedings, in which instance
the debtor shall be liable for legal costs on an attorney and own client scale.
11.5 The legal collection process will start with a letter demanding payment within a stipulated period.
11.6 If the debtor fails to respond within the allowed time, summons will be issued,
11.7 If there is no response to the summons, it will result in a house visit from an official of Council’s Housing
department, followed by default judgement and the ultimate sanction of eviction.
11.8 The provisions in this clause do not prevent Council form implementing any of the credit control and debt
collection actions listed elsewhere in this policy such as the disconnection restriction / blocking of
12. CLIENT CARE, DISPUTES AND APPEALS
Clients may lodge appeals and disputes on the accounts at the Debtor Client services Section. Whilst such an
appeal/dispute is not solved, no credit control measures are to be taken for the disputed amount. Other levies
on the account, which do not form part of such an appeal/dispute, are however still payable and are not included
in the extension for payment. The municipality shall not be held liable for leaks inside properties of the consumer
and no credit will be passed on the consumer account for such leaks.
Should a debtor dispute any of his/her accounts, the following shall apply:
12.1 For a dispute to exist there must be more than just an expression of dissatisfaction and may not be by
implication, a general enquiry and must be submitted within thirty (30) days of the account. If a dispute
is raised after this period, it will be treated as an enquiry, the account will not be suspended and normal
credit control procedures will apply.
12.2 Proven tampering charges are not regarded as a dispute.
12.3 A Customer may be represented by a duly appointed nominee or agent, and such nominee or agent
shall produce written proof of such appointment to the municipality
12.4 The dispute must be in writing in the format prescribed by the municipality and only registered account
holders may lodge a dispute. The dispute must be specific to an individual account.
12.5 The dispute must specify the reasons why the specific account or part thereof is in dispute.
12.6 Should any written dispute arise as to the amount owing on the account in respect of all services by a
customer, the customer shall, pending the resolution and outcome of that dispute, continue to make
regular minimum payments based on the average charges for the preceding twelve months prior to the
arising of the dispute, plus interest, until the resolution of that dispute. Where no average is available,
the amount will be determined by the municipality.
12.7 Should any written dispute arise as to the amount owing on part of the account or service by a
customer, the customer shall, pending the resolution and outcome of that dispute, continue to make
regular payments on services that are NOT in dispute PLUS the average charges for the preceding
three months prior to the arising of the dispute in respect of remaining part of account or disputed
service until the resolution of that dispute.
12.8 The dispute must specify the proposed remedy to rectify the dispute. The municipality is not in any way
obliged to accept the proposed remedy but will consider the proposal.
12.10 The Municipality’s decision is final and will result in the immediate implementation of any debt collection
and credit control measures provided for in this Policy after the debtor is provided with the outcome of
12.11 Any dispute raised by a debtor against any of his accounts or portions of his accounts does not preclude
Council from instituting Credit Control Actions and proceedings in Court for the recovery of the amount(s)
claimed by Council.
12.12 The same debt/issue may not again be defined as a dispute in terms of this paragraph and will not be
reconsidered as the subject of a dispute.
12.13 Should a debtor not be satisfied with the outcome of the dispute, a debtor may lodge an appeal in terms
of section 62 of the MSA.
13. PENSIONER’S REBATE
Pensioner’s rebate on assessment rates will dealt with in terms of the Rate policy.
Applications for assessment rates rebates must be submitted in a prescribed form to the Chief Financial
Officer annually before the end of June for implementation in the next financial year.
14 REPORTING AND PERFORMANCE MANAGEMENT
14.1 The Chief Financial Officer shall report monthly in a suitable format in terms of section 99 of the Systems
Act, read with section 100(c).
14.2 If in the opinion of the Chief Financial Officer, Council will not achieve cash receipt income equivalent of
the income projected in the annual budget as approved by Council, the Chief Financial Officer will report
this with motivation to the Municipal Manager who will, if he/she agrees with the Chief Financial Officer,
immediately move for a revision of the budget according to realistically realizable income levels.
14.4 The Executive Mayor as Supervisory Authority shall, at intervals of 3 months, report to Council as
contemplated in section 99(c) of the Systems Act.
15 APPLICATION OF THE POLICY
The Council reserves the right to differentiate between different categories of consumers, debtors, services or
service standards when applying the Policy. The Council will, on application of the credit control policy, avoid
discrimination as forbidden by the Constitution unless it is established that the discrimination is fair as allowed
by the Constitution.
16. INCONSISTENCY WITH OTHER COUNCIL POLICIES
Should there be any inconsistency and/or conflict between any of the provisions contained in this policy and any
other policy of by-law of the Municipality then the provisions of this policy shall prevail and take preference.
PROPOSED AMENDMENTS AND ADDITION
6.5.1 Clause reconnection will be done within 48 hours was added.
6.8 The clause was added, provided those units in a flat or complex have their own individual meters and those
meters belong to the municipality not Body corporate or Home owner’s association, except in the case where all
residents are approved indigents.
The 90 days clause replaced with 60 days on caluse 22.214.171.124 and 126.96.36.199
.6|l 1.4.2 All legal and debt collection costs, including attorney and own client costs incurred by the Municipality
and/or the appointed Debt Collectors/Attorneys in the recovery of arrear amounts, may be recovered, raised and
levied on the account of the debtor clause is removed.
Net salary range earned by the consumer clause 188.8.131.52 has been amended as follows;
R 1 000 - R 5 999
R6 000-R 12 999
R 13 000-R 29 999
R30 000 and above
25 % of the outstanding debt
6.12.5 The clause was added which reads, consumers who settle their account will receive hundred percent
interest write off as an incentive. The municipality may over and above the interest write off, consider writing off
an amount of not more than sixty percent of admin fees and charges for consumer who settle their accounts.
184.108.40.206 Assistant Managers and the Manager