12 JUNE 2013
CREDIT CONTROL
AND INDIGENT MANAGEMENT
The Steve Tshwete Municipality Experience
AMOS TWALA (AIMFO)
ASSISTANT :DIRECTOR TREASURY
IMFO MPUMALANGA CHAIRPERSON
1
4/9/2015
Effectiveness creates profit,
Efficiency maximises it.
General Perception:




CFO only responsible for credit control
Totally distanced from other
departments
Job of Juniors
Seniors only involved with prominent
cases
2
4/9/2015
BATHO PELE
The deterioration of debtor payment goes
hand in hand with poor customer care.
Eight Batho Pele Principles:








Consultation
Service Standard
Access
Courtesy
Information
Openness and Transparency
Redress
Value for money
3
4/9/2015
PERFORMANCE RESULTS OF THE
STEVE TSHWETE MUNICIPALITY

Average payment rate



2009/2010
2010/2011
2011/2012
100.04%
100.04%
101.29%
Outstanding Consumer debtors >60 Days:



2009/2010
2010/2011
2011/2010
R 16 518 229
R 22 745 853
R 26 209 820
4
4/9/2015
PERFORMANCE RESULTS OF THE
STEVE TSHWETE MUNICIPALITY

Outstanding debt: Total Annual Consumer
levies:



2009/2010
2010/2011
2011/2012
7.5%
5.74%
5.02%
Monthly Debtors / days:



2009/2010
2010/2011
2011/2012
27 Days
20 Days
18 Days
5
4/9/2015
THE VARIOUS STAGES OF CREDIT CONTROL AT
STEVE TSHWETE MUNICIPALITY
1994

Middelburg Town Council amalgamated with Mhluzi Town
Council (Formal Middelburg TLC)










Payment rate less than 10% in Mhluzi
Flat rate for electricity (including payment for water)
Prepaid electricity in Mhluzi and conventional in Middelburg
Prepaid operated by private contractor
Electricity distribution loss 79%
No meters were read
1996
Uniform tariff structure for entire TLC
All meters cleaned – read monthly
Electricity distribution loss 9%
Payment rate +- 92%
6
4/9/2015
THE VARIOUS STAGES OF CREDIT CONTROL AT
STEVE TSHWETE MUNICIPALITY
2001

Middelburg TLC combines with Hendrina (and
Kwazamokuhle) TLC and parts of Middelburg TRC – Form
Middelburg Local Municipality (became Steve Tshwete in
2004)



Payment rate less than 10% in Kwazamokuhle
Prepaid operated by private contractor – Loss paid by TLC from
other sources at +- R 60 000 per month
Electricity distribution loss at 56%
2010



Payment rate +/- 99%
Electricity distribution loss 9.73%
All meters cleaned, repaired and being read
7
4/9/2015
DEBT MANAGEMENT IN A FIRM
COMMUNITY PARTNERSHIP
Community
partnership
Municipal Administration

Service provision regulated by acceptable
/ supportive Policy and By-Laws




Service standards and consumer services
Credit control and debt collection
Control of Services
Indigent support and free basic services
8
4/9/2015
DEBT MANAGEMENT IN A FIRM
COMMUNITY PARTNERSHIP



Services provision only by legitimate
connections
No services provision without service
agreement
Total process supported by delegated
authority
“ IT IS SURVIVAL NOT BRAVERY THAT
MAKES A MAN TO CLIMB A THORN TREE ”
9
4/9/2015
SERVICE CONSUMPTION MUST BE METERED.









All service connections must be metered
Meters suitable to application
Defects immediately reported
Meter replacement programme
Pre-paid electricity metering
Standardizing of meters
Regular audit of meters
Controlled on GIS
Units of un-metered service simple and
understandable
10
4/9/2015
READING OF METERS










Electronic Terminals (Route Master)
Monthly read at similar date
All meters read
Accessibility – deviations reported
Text messages (SMS) to consumers
Notes from the meter readers
Deviation keyed in on terminals
Immediately dealt with
Meter Reader Contractors
Checking defaults separate from readers
11
4/9/2015
FIXED INTERNAL WORK SCHEDULE








Exact and comprehensive planning
Regular fixed dates / strict compliance
All work processes covered
Serve as guidance for all planning
Provide sufficient time for each process
Ensure all work covered and within limits
Rigid
Consistent
12
4/9/2015
MONTHLY CONSUMER STATEMENTS










Combined Statement
Clear understanding lay-out
Reflect all transactions for the month
Reflect meter readings and consumption
Reflect all tariffs (even on sliding scales)
Include a last payment date
Contain a notice of service termination if
not paid at due date
Contain clear and correct address (Obtain
PAM Certificate – twice (2) per year)
Allow for a fourteen day payment period
from delivery to final pay date
In the official communication language of
the Municipality
13
4/9/2015
PAYMENT FACILITIES












12 Own pay points spread over municipality
Available to public – 60 hours per week
3 ATM vending machines
Available 24 hours / 7 days
6 Receptors at garages available 24 hours/7 days
A pay point within 4 km from any residential premises
14 days payment period before due date
Credit card / Debit card facilities
Accept Electronic payments
Identity numbers for direct deposits
Accounts listed for bulk consumers
No pre-paid electricity sold if basic account not up to
date
14
4/9/2015
ACCOUNTS NOT PAID BY DUE DATE
Payment extension subject to:


Sign acknowledgement of Debt / payment
understanding
Regulated by delegated authority
Prior warning arrangement:



Telephone call to responsible person
Text messages (SMS) to cell phones
Letters to larger consumers
Termination of services





Private contractor
All on one day (early as possible)
Re-connection fees
Adjustment of deposit
Accountant on standby until 21:00
15
4/9/2015
FIRST 14 DAYS: FINAL NOTICE

Service Termination without payment
followed up



Final Notices for:







Restrict water meters
Disconnect at pole
Non-payment after termination
Services that can not be terminated
Transfer lessee debt to owners account
Arrange to attach lessee’s rent
Removal of tampered pre-payment meters
Penalty for electricity theft
Awards for information on illegal use
16
4/9/2015
NEXT 30 DAYS: PERSONAL INTERACTION
Difficult accounts handed to independent debt
collector:




On percentage basis
Can not institute formal legal action
Must not disturb consumer relations
Can not collect payments
Lists provided to Ward Councillors:




Interact with defaulters
Visit cases of payment resistance
Report findings
Report on needy cases
17
4/9/2015
INDIGENT SUPPORT /
FREE BASIC SERVICES





Formal enlistment
Only consumers of all four consumer services
Restricted to 20 ampere electricity demand
Can only revert back if account is up to date
Receive free basic services:








Assessment Rates 100%
50 kWh electricity per month
10 kl water per month
Free sewerage
Free refuse removal
Water restriction if consumption exceeds 15 kl per
month
+/- 15500 indigents listed
Include child headed households
18
4/9/2015
AFTER 60 DAYS: HAND OVER



Three different law firms appointed
Follow full debt collection process until
attachment of property
Sale in execution of properties but only if:




Empty stands
Empty houses
Business premises
Attachment remain for period granted and
immediate sale arrangement by sheriff:


When house becomes empty
Occupiers change
19
4/9/2015
BAD DEBT IDENTIFICATION




Each step in debt collection process coded
Once identified irrecoverable, list for
approved to write off
Prevent “dead wood” on debtors register
Delegations to CFO for all debt less than
R2000, above R2000 item to council
20
4/9/2015
HANDLING OF GOVERNMENTS
ACCOUNTS THAT ARE ARREARS



A report of all government accounts that
are in arrears is prepared by the
Accountant income and forwarded to the
provincial treasury and the national
treasury department on monthly basis
Monthly engagements with identified
officials on the payment of accounts
Regular meetings with officials from
government departments
21
4/9/2015
QUESTIONS
22
4/9/2015
THANK YOU
SIYABONGA
23
4/9/2015