Credit control process: a step-by-step guide for SA businesses

A credit control process is the set of steps you follow from the moment you decide to give a customer credit until their invoice is paid or written off: a written credit policy, checks before opening an account, clear terms on every invoice, scheduled reminders, escalation (calls, service suspension, final demand), payment arrangements, and finally handover to collections or legal action. Doing the same thing, on the same days, for every customer is what makes it work.

Small businesses often skip credit control until cash runs short. A simple, consistent process prevents that.

Step 1: Write a credit policy

One page is enough. It should answer:

• Who gets credit? For example: consumers pay upfront or by debit order; businesses may apply for 30-day terms.
• How much? Default credit limits by customer type, and who can approve higher limits.
• What terms? For example 30 days from invoice date or statement. Our colleagues cover options in invoice payment terms.
• What happens when accounts are late? The escalation timeline below.
• Who is responsible? Name the person who owns credit control, even if it's the owner.

Step 2: Open accounts properly

Before giving credit:

• Use a credit application form: registered name, registration and VAT numbers, directors, physical address, trade references, bank details, accounts contact.
• Get the applicant's consent for credit checks and to process their information (POPIA applies to personal information of directors and sole proprietors).
• Include terms and conditions the customer signs: payment terms, interest on overdue amounts (if any), collection costs, jurisdiction, and a suretyship from directors for larger limits if appropriate.
• Consider deposits or upfront payment for new or higher-risk customers.

If you plan to charge interest on overdue accounts for consumers, be aware that the National Credit Act can apply to "incidental credit agreements", with limits on fees and interest. Check the National Credit Regulator's guidance or take advice.

Step 3: Invoice fast and accurately

Late or incorrect invoices are the most common reason for late payment. Every invoice should:

• Go out on the day the goods or services are delivered (or on the billing date for subscriptions).
• Include a PO number if the customer requires one.
• Meet the VAT invoice requirements if you're registered.
• Show the due date, a unique payment reference and a payment link.

Step 4: Remind before and after the due date

Use a schedule, not memory:

Adjust to your terms and customer mix. Our colleagues have payment reminder email templates for each stage.

Step 5: Resolve queries quickly

Many "late payers" are waiting on a query: wrong amount, missing PO, disputed delivery. Log every query, fix it within days, and issue a credit note where needed. An unresolved query stops the clock for the customer, but not for your cash flow.

Step 6: Escalate consistently

• Stop further credit. Put the account on hold at a defined point (for example 30 days overdue) so the debt doesn't grow.
• Suspend services where your contract allows it, with notice.
• Senior contact. A call from the owner or financial manager often works where reminders haven't.

Step 7: Offer structured payment arrangements

When a customer genuinely can't pay in full:

• Agree a realistic plan with fixed dates and amounts.
• Put it in writing and get it signed as an acknowledgement of debt. This also interrupts prescription; see debt prescription in South Africa.
• Collect instalments by debit order where possible.
• If an instalment is missed, the full balance becomes due (state this in the agreement).

Step 8: Hand over or write off

Decide per account:

• Collections agency or attorney for larger debts with a traceable debtor. Agree fees upfront.
• Small Claims Court for smaller amounts within its limit.
• Write-off where the cost of collection exceeds the likely recovery. Talk to your accountant about the tax and VAT treatment of bad debts.

Measure your credit control

• Days sales outstanding (DSO)
• % of receivables over 60 and 90 days (use an aged receivables report)
• Bad debts written off as a % of revenue
• Promise-to-pay kept rate for arrangements

Review monthly. If the 60+ day column is growing, the process isn't being followed.

How CentraPoint helps

CentraPoint automates the routine parts of credit control: invoices go out on time with payment links, dunning reminders run on a schedule you define, overdue invoices and outstanding balances show per customer, and customers can view and pay invoices in the customer portal. Recurring customers can be moved to debit order or saved card, and the report builder shows outstanding balances by age. See invoices and customers in the docs.

Frequently asked questions

What is the purpose of credit control?

To make sure customers who are given credit pay on time, to limit the amount of bad debt, and to protect cash flow, while keeping good customer relationships.

When should I stop supplying a customer who hasn't paid?

Set a point in your credit policy, such as 30 days overdue or when the credit limit is exceeded, and apply it consistently. Give notice before suspending services where your contract requires it.

Can I charge interest on late payments?

Only if your terms allow it and were agreed before the credit was given. For consumer accounts, the National Credit Act may limit the interest and fees you can charge.

When should I hand an account over for collection?

Typically after a final demand has expired without payment or arrangement, often 30–60 days overdue. Earlier handover improves recovery, but consider the relationship and the fees.