Time running out for errant ratepayers
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Help is on the way for cash-strapped local authorities who are collectively owed more than R100-billion by their errant ratepayers.
A consortium of companies in the financial services and software industry have come up with a plan that will help municipalities collect these outstanding funds by implementing a sophisticated combination of carrot and stick measures that will encourage rate payers who have fallen behind in payments to pay up.
Hennie Heymans, CEO of StratCol, one of the largest payments systems companies in South Africa, said his company had joined forces with associated company, Swordfish, whose debt collecting software was currently being used by Nedbank, FNB and a host of other business entities to collect outstanding debts.
“Our associates already won its first tender for our financial services package with the Westonarea Local Municipality which is owed a substantial amount of money by its ratepayers,” Heymans said.
The system which is based on a software package written by Pretoria-based software systems company, Swordfish, helps municipalities to first of all identify consumers who owe them money and then assist them in the collection of these funds, said Swordfish CEO, Jacques Lubbe.
“The overwhelming majority of local authorities are in the dark as to exactly how much money they are owed. The software, ensures that the negative stigma usually associated with the debt collection process is avoided.
This is achieved by innovative trace confirmation which identifies the current whereabouts of the debtor.
The system allows debtors who admit liability to enter into a payment arrangement early in the process.
The procedure further provides for a “one stop” solution from the earliest debit order right through to legal action including default judgment and possible execution against movables.
The preferred method of payment will be through debit orders which will be managed by StratCol.
Heymans said his company had many years of experience in the payments systems arena and was prepared for the massive influx of new debit orders that would result from the implementation of the Swordfish program.
“We know that almost all municipalities in South Africa are in dire straits because of the non-payment of water, electricity, sewerage and rates and taxes accounts which has resulted in the non-delivery of essential services to their residents. This in turn has resulted in unrest from dissatisfied consumers who are demanding better service delivery.”
The first step in the implementation of the system at Westonaria, and future municipalities who are expected to come on board soon, will be to identify ratepayers who are in arears by using a sophisticated track and trace system which will be operated by a law firm with years of experience in the field.
A huge advantage of the system is that it is hosted in the cloud which means that municipalities will not have to spend a single cent on new hardware or additional infrastructure because they will be able to access the software via the Internet.
“Once we have traced the ratepayer we provide him or her with a range of payment options. The most effective method would be for them to agree to a debit order. They will also be able to make payments at ATM machines and cash payments at point of sale terminals in most major retailers and department stores, using StratCol ‘s and Swordfish’s alternative payment platforms.”
A major boost for the programme was the fact that the SA Local Government Association (Salga) announced that it was taking steps against thousands of defaulters owing municipalities almost R100 billion by introducing a law that would set up an agency, similar to the SA Revenue Service (Sars), to attach people’s salaries (via garnishee orders).
Salga’s head of the finance working group, Subesh Pillay, told the standing committee that the new law would give the agency teeth, like Sars, to go after defaulters and recoup billions.
Municipal debt has more than doubled in the past five years, rising from R43bn in 2010 to a staggering R93bn in 2015.
Pillay said while people were able to pay their bonds, clothing accounts and school fees, they defaulted on municipal accounts.
The Minister of Co-operative Governance and Traditional Affairs, Pravin Gordhan, said earlier that a third of municipalities were dysfunctional.
