12 june 2013 credit control and indigent management
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12 JUNE 2013 CREDIT CONTROL AND INDIGENT MANAGEMENT. The Steve Tshwete Municipality Experience AMOS TWALA (AIMFO) ASSISTANT :DIRECTOR TREASURY IMFO MPUMALANGA CHAIRPERSON. Effectiveness creates profit, Efficiency maximises it. General Perception: CFO only responsible for credit control

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12 june 2013 credit control and indigent management

12 JUNE 2013CREDIT CONTROLAND INDIGENT MANAGEMENT

The Steve Tshwete Municipality Experience

AMOS TWALA (AIMFO)

ASSISTANT :DIRECTOR TREASURY

IMFO MPUMALANGA CHAIRPERSON

effectiveness creates profit efficiency maximises it
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
batho pele
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
performance results of the steve tshwete municipality
PERFORMANCE RESULTS OF THE STEVE TSHWETE MUNICIPALITY
  • Average payment rate
    • 2009/2010 100.04%
    • 2010/2011 100.04%
    • 2011/2012 101.29%

Outstanding Consumer debtors >60 Days:

    • 2009/2010 R 16 518 229
    • 2010/2011 R 22 745 853
    • 2011/2010 R 26 209 820
performance results of the steve tshwete municipality1
PERFORMANCE RESULTS OF THE STEVE TSHWETE MUNICIPALITY
  • Outstanding debt: Total Annual Consumer levies:-
    • 2009/2010 7.5%
    • 2010/2011 5.74%
    • 2011/2012 5.02%
  • Monthly Debtors / days:
    • 2009/2010 27 Days
    • 2010/2011 20 Days
    • 2011/2012 18 Days
the various stages of credit control at steve tshwete municipality
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%
the various stages of credit control at steve tshwete municipality1
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
debt management in a firm community partnership
DEBT MANAGEMENT IN A FIRM COMMUNITY PARTNERSHIP

Community

Municipal Council

Community partnership

  • 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

Municipal Administration

debt management in a firm community partnership1
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 ”

service consumption must be metered
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
reading of meters
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
fixed internal work schedule
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
monthly consumer statements
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
payment facilities
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
accounts not paid by due date
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
first 14 days final notice
FIRST 14 DAYS: FINAL NOTICE
  • Service Termination without payment followed up
    • Restrict water meters
    • Disconnect at pole
  • Final Notices for:
    • 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
next 30 days personal interaction
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
indigent support free basic services
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
after 60 days hand over
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
bad debt identification
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
handling of governments accounts that are arrears
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
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