Late Payment & Debt Recovery Toolkit

Yes. If your terms of trade set an interest rate, that rate applies. If they say nothing, the Prescribed Rate of Interest Act 55 of 1975 supplies one: interest runs from the day after the invoice's due date, at the prescribed rate. Where there was no agreed due date, interest runs from the date you make a written demand that sets out the amount clearly enough for the customer to work it out. Interest is simple, not compounded, unless your agreement says otherwise.

10.50% a year, from 1 July 2026. The Act fixes the rate at the Reserve Bank's repo rate plus 3.5%, effective from the first day of the second month after each repo decision. After the repo rate moved to 7.25% on 23 September 2026, the prescribed rate becomes 10.75% from 1 November 2026.

No. Section 1(1) of the Act applies the rate in force when the interest begins to run. An invoice that fell due in August 2025 keeps its rate even though the prescribed rate has moved since. This toolkit applies that rule to each invoice separately.

A common-law rule that stops unpaid interest from growing once it equals the unpaid capital. If a customer owes R10,000, the arrear interest you can claim tops out at R10,000. If they pay some of the interest, it can start running again. The toolkit caps interest automatically and tells you when a debt has hit the cap.

An ordinary debt prescribes after three years under the Prescription Act 68 of 1969, counted from when it was due. An express or tacit acknowledgement of the debt interrupts prescription and starts the three years again. A signed acknowledgement of debt is the clearest form; a part-payment is usually treated as a tacit acknowledgement. Issuing summons also interrupts it. The toolkit shows each invoice's prescription date and warns you when one is close.

No. Section 7 of the Small Claims Courts Act allows only a natural person to start a claim; a company or close corporation can only be the defendant. A sole proprietor may claim personally, for amounts up to R30,000 from 1 August 2026 (it was R20,000). You must first deliver a letter of demand by hand or registered post and give the other side 14 days to pay. No attorney is needed, and there is no court fee.

A district Magistrate's Court hears claims up to R200,000 and a regional court up to R400,000. Larger claims go to the High Court. A company that cannot use the Small Claims Court usually starts in the district Magistrate's Court, with or without an attorney.

Within 30 days. Treasury Regulation 8.2.3 under the Public Finance Management Act requires departments to settle all payments due to creditors within 30 days of receiving an invoice, unless a contract says otherwise. For municipalities, section 65(2)(e) of the Municipal Finance Management Act sets the same 30 days. The toolkit generates an escalation letter to the accounting officer that cites the right rule.

Generally not. The six-month notice in section 3 of the Institution of Legal Proceedings against certain Organs of State Act 40 of 2002 applies to claims for damages. The Supreme Court of Appeal held in Thabani Zulu & Co v Minister of Water Affairs that a contractual claim for payment is not a "debt" under that Act. Confirm with an attorney before you issue summons, since some claims are framed as damages.

Only if your agreement with the customer allows it, and then within the limits of the law. Collection costs charged by attorneys and debt collectors are regulated. Adding fees you never agreed on weakens a letter of demand, so this toolkit does not add any.

No. Interest on an overdue account is an exempt financial supply, so no VAT is added to it. Your original invoices keep their VAT; the interest line does not carry any.