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Whereas the Council acknowledge its responsibility in
terms of the Municipal Systems Act, Act 32 of 2000 ,
towards the community for the rendering of services, the
community acknowledge their responsibility to pay
promptly for services rendered.
1.                   POLICY VISION AND STATEMENT


                                      To ensure that all consumers pay for the services that are
                     supplied and consumed according to the Municipality’s approved tariff
                                      To ensure that all credit control related enquiries are
                     attended to on the same day on which the enquiries were reported to the
                     relevant municipal credit control official;
                                      To attend to all the consumers needs regarding credit control
                     in such a manner that it should not be necessary to sell property or goods on
                     execution of sale;
                                      To have credit control centres in place within the areas
                     where the consumers reside and where all credit control related issues and
                     needs may be addressed or attended to;
                                      To ensure that Municipal credit control officials are
                     sufficiently trained to ensure that they will be able to attend to all credit
                     control related functions and enquiries.


            In order to promote social and economic development and to provide services to
            communities in a efficient and sustainable manner, the Greater Tzaneen Municipality
            believes that a credit control and debt collection policy should be adopted to collect
            all money due and payable to the Municipality. It is further recognised that Council is
            not a banker or credit institution who will grant credit for longer than 24 months, or
            other than resolutions taken by Council regarding officials.

2.                   AIM

            This policy will further lay down broad principles which will result in the adoption of a
            by-law for the implementation and enforcement of credit control and collection of all
            outstanding debts.

       2.            OBJECTIVES

            The objective of this policy is to provide for:-

          3.1     credit control procedures and mechanisms;
          3.2     debt collection procedures and mechanisms;
          3.3     indigent households and to be consistent in the implementation of Council’s
                  tariff policy;
          3.4     interest on arrears, where appropriate;
          3.5     extensions of time for payment under certain circumstances;
          3.6     the termination or restriction of services when payments are in arrear;
          3.7     procedures relating to unauthorised consumption of services, theft and
          3.8     guidelines and procedures for the rendering of accounts.
          3.9     realistic targets/benchmarks consistent with:-
                  1.                General recognised accounting practices and collection
                  2.                the estimate of income set in the budget less an acceptable
                            provision for bad debts.

2.                DEFINITIONS

          Council Refers to the Greater Tzaneen Municipal Council.
          Owner For the purpose of this policy the definition of owner will be the same as the
          definition stipulated in the Property Rating Act, Act 2001;

     2.           DELEGATION

          The implementation of the credit control policy is the competency of the Municipal
          Manager but it is delegated to the Chief Financial Officer and sub-delegation by way
          of deconcentrating as a form of delegation, is permitted in terms of section 59 of the
          Municipal Systems Act, Act 32 of 2000.

          The signing of Rule 38 and Court orders for the attachment of property is delegated
          to the Chief Financial Officer.

          All sub delegations must be in writing.


          4.1     COUNCILLORS

                  In terms of section 99 of the Municipal Systems Act, Act 32 of 2000 is the
                  Executive Committee the supervisory committee and must:-

                  4.1.1   Oversee the implementation and enforcement of the Council’s credit
                          control and debt collection policy and any by-law enacted in terms of
                          section 98 of the Municipal Systems Act, Act 32 of 2000;
                  4.1.2   Measure the performance of the Municipal Manager in the
                          implementation of the credit control and debt collection policy;
                  4.1.3   Evaluate the credit control and debt collection policy from time to
                          time to improve the efficiency, mechanisms, processes and
                  4.1.4   Report to Council on a monthly basis on the implementation of the
                          credit control and debt collection policy.

          4.2     ADMINISTRATION

                  In terms of section 100 of the Municipal Systems Act, Act 32 of 2000 the
                  Municipal Manager is the implementing authority and must:-

                   4.2.1   implement and enforce the municipality’s credit control and debt
                           collection policy and any by-law enacted in terms of section 98 of the
                           Municipal Systems Act, Act 32 of 2000;
                   4.2.2   establish effective administrative mechanisms, processes and
                           procedures to collect all money due and payable to Greater Tzaneen
                   4.2.3    Report to the Executive Committee on a monthly basis on the
                           implementation of the credit control and debt collection policy.


           5.1     MUNICIPAL SYSTEMS ACT, ACT 32 OF 2000

                   Section 96 of the Municipal Systems Act, Act 32 of 2000 determines the

96.                                                 A municipality-
                           (a)                             must collect all money that is due
                                   and payable to it, subject to this Act and any other
                                   applicable legislation; and
                           (b)                             for this purpose, must adopt,
                                   maintain and implement a credit control and debt
                                   collection policy which is consistent with its rates and
                                   tariff policies and complies with the provisions of this

      6.   CUSTOMER CARE

           The implementing authority must institute proper customer care and management
           mechanisms and insure that it falls within the ambit of the budget. The customer care
           management must make provision for:-

           1.                                The creation of positive and reciprocal relationships
                   between the Municipality and their customer;
           2.                                The establishment of mechanisms for users of
                   services and ratepayers to give feedback on the quality of services and the
                   performance of the services provider;
           3.                                Mechanisms whereby users of services will be
                   informed on the cost to render a specific service;
           4.                                Mechanisms do deal with complaints from users, as
                   well as for the monitoring of replies and corrective steps to complaints;
           5.                                The provision of pay points for the settling of
                   accounts or for making pre-payments for services;
           6.                                The creation of mechanisms to inform first time
                   defaulters of their arrears before credit control is instituted;
           7.                                The      creation    of      mechanisms     to   give
                   acknowledgement to prompt payers of accounts.

           The implementing authority must ensure that the provisions of section 95 of the
           Municipal Systems Act, Act 32 of 2000 is implemented. The implementation of the
           Customer Care Management system will be the responsibility of the Section
           Communication in the office of the Municipal Manager in Collaboration with the Chief
           Financial Officer.


           7.1     Credit control procedures and mechanisms

                   The implementation of the procedures lies with the implementing authority

and the implementing authority will institute the necessary administrative
procedures and mechanisms to implement the following key procedures:-

7.1.1   Service Agreements
7.1.2   Credit scanning
7.1.3   Rendering of accounts
7.1.4   Deposits;

7.1.1   Service Agreements

        The signing of service agreements is important and key to the
        rendering of services. The agreements constitutes a legal binding
        document between Council and the owner of the property.

        Agreements for the rendering of services with consumers will only be
        entered into with the consent of the owner or his duly authorised

        The contents of section 118 of the Municipal Systems Act, Act 32 of
        2000 , will be brought under the attention of the owner or his duly
        authorised agent.

7.1.2   Credit Scanning Every applicant will be scanned with his previous Council
                       (where applicable) to determined his payment levels
                       and deposit that will be applicable.

                        Every applicant will be scanned with the credit
                        bureau as well as his present creditors to determine
                        his payment history.
 The results obtained in above will determine the
                       deposit amount in terms of Council’s consumer
                       deposit policy. The deposit as determined will be regarded as payable,
                      where a deposit cannot be paid as determined, the
                      flow of water will be restricted to the basic kl that is
                      provided free of charge. Electricity will not be

7.1.3   Rendering of accounts Accounts should be rendered promptly on a monthly basis to
                       all consumers or owners of properties situated
                       inside or outside the area of jurisdiction where
                       services are rendered by the Greater Tzaneen
                       Municipality; Owners of property will be assured that accounts are
                      accurate, and metered services are being read on a
                      monthly basis circumstances permitting.

7.1.4   Deposits

        A deposit is payable and will be charged in terms of Councils
        deposit policy on every new application, a deposit is not transferable.

              The increase of a deposit as a result of defaulting on the account will
              be in accordance to the deposit policy, and is delegated to the Chief
              Financial Officer.

7.2   Debt Collection Procedures and Mechanisms

      The implementation of the procedures lies with the implementing authority
      and the implementing authority will institute the necessary administrative
      procedures and mechanisms to implement the following key procedures:-

      7.2.1   Reminding Letter;
      7.2.2   Letter of demand;
      7.2.3   Discontinuation of services;
      7.2.4   Handing over to-
                                                      Debt collectors
                                                      Attorneys.

      7.2.5   Handing over to Credit Bureau
      7.2.6   Attachment of assets

      7.2.1   Reminding Letter

     A letter to remind a consumer that he/she is in arrears with
                               his account will be send to every account holder.

      7.2.2   Letter of demand

     A letter of demand will be send to every owner or consumer
                               who is in arrears with his account with Council.

     Were the consumer is not the owner of the property, the
                             owner will be informed on the default of the

      7.2.3   Discontinuation of services

     Services of defaulters will be suspended as far as possible in
                              the following order:-

                              First electricity,
                              secondly water with a restriction to the minimum
                              level as approved in terms of the budget by Council.

      7.2.4   Handing over

              The handing over of defaulters is the beginning of a legal process
              and payments for arrears can only be made to the relevant agent
              appointed by Council.

              It is important that defaulters be handed over to debt collectors when
              the Credit Control Section was unsuccessful with the collection
              process. Defaulters who do not respond to the debt collectors will be
              handed to Council’s attorneys for collection.

      7.2.5   Handing over to Credit Bureau

              Council believes that once the attorneys have failed to collect the
              outstanding debt then the name and amount of the defaulter should

              be handed over to the credit bureau.

      7.2.6   Attachment of Assets

              If defaulters remain behind with their accounts and Council has
              followed all other avenues to collect outstanding debt, Council will
              then proceed with the attachment of assets(moveable and
              inmoveable) in order to collect outstanding debt.

7.3   Indigent Households

      In terms of Council’s Indigent policy will all classified Indigent Households
      receive a subsidy from National raised revenue. It is required from these
      households to pay for the portion of the amount owned to Council which is
      not covered by the subsidy.

      Indigent households will be handled in terms of Councils indigent policy.
      Although Council has adopt a indigent policy every consumer will be subject
      to conditions set in this policy and any by-law that emerges from this policy.

7.4   Interest on Arrears

      Every account that is 30 days and more in arrears will be subject to interest
      as determined by Council.

7.5   Extensions for Payment

      Extensions for payment will only be granted for:-

             Administrative or calculation errors on accounts;
             The finalisation of a late estate;
             Any other request for extension subject to the guideline laid down by
              the extension committee.

      Extension will be handled on the merit of the case and the term of extension
      should not exceed 2 years (24 months).

      Were extensions or loans is allowed the applicant must provide the Chief
      Financial Officer with prove of his/her monthly income, and the extension or
      loan may not be more than 30% of his/her gross income.

      All application for extension will serve before and extension committee
      consisting of an official from the following Departments:-

                                      Chief Financial Officer
                                      Eletrotecnical Town Engineer
                                      Civil Town Engineer

      The number of members will be decided by the committee and they will have
      the authority to grant extension on the above matters as well as to determine
      the period of the extension.

      In execution their mandate the committee must take in consideration the
      financial implication of their decisions and weight it against the risk of the

      All requests for extension will be looked at with the written consent of the

      7.5.1   Appeal on the Decision of the Extension Committee

              If a consumer is of the opinion that his request has not been handled
              in terms of this policy, he/she will be entitled to lodge an appeal on
              the findings of the committee to the Municipal Manager for his

              The decision of the Municipal Manager will be final and will be
              implemented as decided.

7.6   Termination Or Restriction of Services

      The supply of electricity will be terminated (where applicable) if a debtors
      account is in arrears for more than 30 days.

      Water will be restricted to the minimum level as approved by Council in the
      Budget for the year, if a debtors account is in arrears for more than 30 days

      The restriction of services will also be applicable were the Municipality is
      making use of a pre-paid metering system and were other services (i.e.
      Rates) are in arrears.

7.7   Unauthorised Consumption of Services

      7.7.1 Penalties

              A debtor who reconnect himself to his electricity supply or reinstate
              his full water capacity will be regarded as illegal unauthorised and

              All illegal or unauthorised connections for water and electricity
              connections will be removed.

              Any person who is or form part of an criminal act will be fined with an
              amount as approved by Council, with a minimum of R1 000,00.

              A debtor who has been disconnected as a result of an criminal act
              will have to complete an application form to reconnect to the
              distribution system.

      7.7.2   Legalise Illegal Connections

              As a once off, all current illegal connections will have 3 (three)
              months to declare and legalise their connection from the date of the
              implementation of this policy.

              After the period of three months all users of illegal connection will be
              regarded as a criminal act and will be charged in terms of 7.7.1

              All illegal connections will be removed after the grace period as
              stated above.

7.8   Payment of accounts

      When payment is received from a debtor, a principle of oldest debt first will
      be followed and credited as such. On current accounts credits will be
      allocated as follow:-

                                      Interest

                                                      arrears
                                                      sewer
                                                      refuse
                                                      rates
                                                      sundry
                                                      water
                                                      electricity

            7.9     Realistic targets/benchmarks

                    To be in a position to measure the outcome of the policy, Council believes
                    that the output of this policy should be measured in terms of general
                    recognised accounting practices and the following benchmarks will be

                                                    Debt collection Period
                                             Total Outstanding debtors               365
                             Formula =      Revenue                    X             1

                                                  Annual debtors collection rate
                                        Last 12 months receipts from debtors     100
                             Formula = Last 12 months Billing               X 1

                    The norm on the debt collection period is set at 45 days and the collection
                    rate is set at 90%

10.                 DISPUTES

            10.1    Any dispute on an account rendered by the municipality must be in writing
                    within 30 days after the rendering of the account under dispute.

            10.2    Where a written dispute has been received the Municipality will strive to settle
                    the dispute within 48 hours after the receiving thereof.

            10.3    While the dispute is under investigation the Municipality will not implement
                    this policy in terms of section 102 (2) of the Systems Act.

      11.   LONG TERM CREDIT

            The Greater Tzaneen Municipality does not see itself as a credit provision institution
            and where debtors other than officials seek long term credit except those granted
            extension as provided in paragraph 7.5, should do so at a financial institution.


            Council’s policy is that Councillors and officials will set an example to the community,
            and Councillor’s will sign a debit order against their allowances and officials against
            their salary.

            The deposit policy will not be applicable to officials or Councillors.


            Not withstanding the requirements in Section 118 of the Systems Act the owner on
            application of a clearance certificate will be held jointly and severally liable for any
            outstanding debt on his/her property.

            13.1    Issuing of clearance certificate

           The issuing of a clearance certificate is subjected to the full payment of all
           outstanding debt on the property concerned. For the purpose of this policy
           full payment will be regarded as:

                            The issuing of an official receipt on the date of application for
                   such a certificate or,
                            The issuing of a guarantee by the applicant secured by cash
                   in the bank which will be paid to the Municipality on the date of
                   transfer of the property.


                          Tariff policy
                          Indigent policy
                          Deposit policy
                          Credit Control and debt Collection Manual


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