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12 JUNE 2013CREDIT CONTROL

AND INDIGENT MANAGEMENT

The Steve Tshwete Municipality Experience AMOS TWALA (AIMFO)

ASSISTANT :DIRECTOR TREASURY IMFO MPUMALANGA CHAIRPERSON

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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

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BATHO PELEThe 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

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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

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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

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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%

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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

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DEBT MANAGEMENT IN A FIRM 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

Mun

icip

al C

ounc

il

Municipal Administration

Com

munity

Community partnership

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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 ”

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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

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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

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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

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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

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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

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ACCOUNTS NOT PAID BY DUE DATEPayment 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

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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

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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

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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

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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

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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

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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QUESTIONS

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THANK YOU

SIYABONGA