Quick answer
Prepare enough information to decide whether the claim is legally and economically worth pursuing. Identify the legal debtor, show why the amount is due, reconcile the balance and disclose the strongest known defence. Add any security, insolvency indicator, time pressure and the commercial outcome you would accept.
How to use this guide
Before the first legal call, test whether the claim is correctly framed and economically sensible. Confirm the legal debtor, source of the obligation, performance, reconciled amount, due date and strongest known defence. Add prescription, security, formal insolvency status and realistic collectability so the lawyer can compare recovery routes rather than assume litigation is the next step.
Test whether the debt is claim-ready
A recoverable account begins with the correct creditor, the correct debtor and an obligation that has become due. Check the contract or accepted scope, performance, invoicing, agreed adjustments and the event that triggered payment. Delayed payment alone does not reveal whether the National Credit Act or another special regime applies; classification depends on the parties and transaction.
Run the viability checks
Test these points before treating the account as claim-ready:
- Verify the creditor and debtor legal names, registration numbers, trading names and contracting capacity.
- Identify the agreement, quotation, order or accepted scope that created the payment obligation.
- Match performance and acceptance records to each invoice, credit note, payment and disputed line item.
- Calculate when each amount became due without assuming the invoice date starts every legal time period.
- Record complaints, counterclaims, set-off assertions, payment arrangements and acknowledgments in their full context.
- Check security, suretyships, business-rescue or liquidation indicators, likely assets and the realistic cost of recovery.
Reconcile proof and amount
Choose the records that answer the debtor’s strongest known position. If performance is disputed, connect the order to delivery, acceptance and complaints. If the amount is disputed, reconcile invoices, credits, receipts and allocations. Preserve acknowledgments and settlement communications in full context. A ledger is useful evidence of accounting history, but it is not by itself conclusive proof of liability.
Choose the recovery decision
Evaluate legal strength and commercial recovery separately. Prescription, a contractual time bar, the chosen forum, security, business-rescue or liquidation status and reachable assets can change the sensible route. An ordinary demand does not automatically interrupt prescription. Ask the lawyer to identify the smallest next step that protects the claim while testing whether further spend is proportionate.
Avoid an avoidable defence
The first demand is weaker when the business has already:
- Do not assume the account statement alone proves the debtor accepted the goods, services or balance.
- Do not wait for a demand letter to interrupt prescription because an ordinary demand generally does not.
- Do not threaten liquidation where liability is genuinely disputed on reasonable grounds.
- Do not add interest, collection fees or penalties without identifying the contractual or statutory basis.
Prepare the first legal brief
Summarise the claim so that viability can be assessed, not assumed:
- Write a one-line basis for liability and a separate one-line summary of the debtor's answer.
- Reconcile principal, interest, credits and payments to a dated schedule.
- Identify the earliest plausible prescription date and any fact that may delay or interrupt it.
- Record security, solvency concerns and information about enforceable assets without unlawful investigation.
- Ask for a staged recovery recommendation that compares demand, negotiation, proceedings and enforcement.
Deeper analysis: business-debt viability brief
Separate claim strength from account age. An old invoice may be supported by clear acceptance and acknowledgment, or it may hide a wrong entity, disputed scope, missing delivery, unprocessed credit or expired time bar. State the debtor's best version fairly and place the record that answers it beside the allegation; a credible risk assessment needs both sides of the transaction.
Treat collectability as evidence, not intuition. Record lawful information about business-rescue or liquidation status, known security, prior payment behaviour and assets relevant to enforcement. Do not assume a trading business is solvent or that a strong judgment will produce payment. The cost of obtaining and enforcing relief must be compared with the claim value and available commercial settlement.
The first instruction should identify a stopping point. It may be a prescription opinion, debtor and balance verification, evidence-gap report, demand strategy or settlement proposal. Ask what fact would justify summons, arbitration or urgent action, and what fact would make further spend disproportionate. This keeps the legal mandate aligned with the business's recovery objective.
Test the debtor identity and payment path
Reconcile the entity that ordered, received performance, was invoiced and made prior payments. Trading names, group companies and a contact person's email domain do not by themselves establish which legal person owes the debt. Keep purchase orders, onboarding records, tax invoices and bank references together so the proposed defendant is not selected from assumption.
Map every payment and credit to the principal balance before asking for legal escalation. Identify whether interest comes from the agreement, another legal basis or a calculation that still needs verification. A clean debtor-and-balance schedule can reveal that the urgent task is correcting the account, pursuing a surety or addressing a genuine contractual dispute rather than sending another demand to the wrong party.
Limits of the viability screen
The viability brief does not establish liability, the applicable prescription date or the debtor's solvency. Those depend on the agreement, debt category, knowledge and interruption facts, defences and current status. A near time bar, served process, business rescue, liquidation or threatened dissipation should be escalated without waiting for routine collection correspondence.
FAQs
Is an unpaid invoice enough to start a claim?
An invoice records the amount claimed, but the agreement, performance, acceptance, due date, credits and defences still need to be tested.
Does sending a demand stop prescription?
An ordinary demand generally does not. Obtain prompt advice about the applicable period and the steps that can lawfully interrupt it.
Do all business debts prescribe after three years?
No. Three years may apply to many ordinary debts, but the debt category, due date, knowledge rules and other legislation can change the analysis.
Should collectability be checked before legal action?
Yes. A strong claim can still be uneconomic if the debtor has no reachable assets, is in formal restructuring or enforcement costs are disproportionate.
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Legal note
This article is general legal information for South African readers. It is not legal advice. Speak to a qualified legal professional about your specific facts before taking action.