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A Guide to Municipal Financial Management for Councillors

A Guide to Municipal Financial Management for Councillors

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Published by littleconspirator

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Published by: littleconspirator on Mar 07, 2012
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The MFMA and the MSA provide that a municipality must collect all money that is due
and payable.The municipal council must adopt by-laws to give effect to the credit
control and debt collection policy,making sure that it is implemented and enforced.
The by-law for this policy may differentiate between different categories of ratepayers,
users of services,debtors,taxes,services,service standards and other matters as long
as the differentiation does not amount to unfair discrimination.

The credit control and debt collection policy should be reviewed in line with the
council’s policy on indigents.Quite often the credit control and debt collection policy
and the indigent policy are not aligned,which results in confusion when implemented
by officials.The MFMA is aiming for more coherence,requiring that all related policies
should be reviewed when tabling and adopting the municipal budgets.These policies
must be consistent with the municipality's rates and tariff policies and provide for:
•credit control procedures and mechanisms
•debt collection procedures and mechanisms
•provision for indigent customers that is consistent with its rates and tariff
policies and any national policy on indigents
•realistic collection targets consistent,and the estimates of income set in the
•interest on arrears,where appropriate
•extensions of time for payment of accounts
•termination of services or the restriction of the provision of services when
payments are in arrears
•matters relating to unauthorised consumption of services,theft and damages,and
•public disclosures of information.

Another reason for making sure that there is coherence in policies for revenue raising,
credit control,debt collection and indigent customers is that it will facilitate realistic


revenue budgets.If these policies are inconsistent,the forecast revenue will not be

Implementing the policies must include effective administrative mechanisms,
processes and procedures to collect money that is due and payable to the municipality.
The collection procedures must include internal controls for the protection of account
records,custody of monies collected and deposits into the bank account of the

The collection policy must provide an authorised representative of the municipality or
service provider access at reasonable hours to the premises in order to read,inspect,
install or repair any meter or service connection for reticulation,or to disconnect,stop
or restrict the provision of any service.In addition,a municipality may consolidate any
separate accounts of persons liable for payments to the municipality,or credit a
payment by such a person against any account of that person.The collection and credit
control measures provided for in the collection policy may be used for the collection of
any account in arrears.

A municipality may,with the consent of a person liable to the municipality for the payment
of rates or other taxes,or fees for municipal services,enter into an agreement with that
person’s employer to deduct from the salary or wages of that person either outstanding
amounts due by that person to the municipality; or regular monthly amounts as may be
agreed.In addition,the municipality may provide special incentives for employers to enter
into such agreement and/or to employees to consent to such agreements.

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