There is a deadline built into South African law that most business owners never hear about until it is too late. Under the Prescription Act 68 of 1969, most commercial debts become legally unenforceable after a fixed period. Once that period runs out, the debt prescribes, and it does not matter how clearly the money is owed, how strong your paperwork is, or how blatantly the debtor has been avoiding you. The claim simply dies.
This article explains how prescription works, which debts it applies to, what can interrupt it, and what you should do if your outstanding account is approaching the deadline.
The three-year rule for most commercial debt
The Prescription Act sets different periods for different types of debt, but the one that matters to most South African businesses is three years. An ordinary commercial debt, such as an unpaid invoice for goods supplied or services rendered, prescribes three years after it becomes due.
“Due” means the date the payment obligation arose, not the date you first noticed it was unpaid. If your invoice terms are 30 days from date of invoice, the debt becomes due on day 31. The three-year clock starts there.
There are longer periods for certain categories. A debt established by a court judgment prescribes after 30 years. A debt secured by a mortgage bond prescribes after 30 years. A debt owed to the state in respect of taxes prescribes after 15 years. But for the standard B2B unpaid invoice, the period is three years, and most business owners are stunned by how short that is.
How creditors accidentally let debt die
The most common way a debt prescribes is not through ignorance of the law. It is through optimism. The creditor keeps sending statements, keeps calling, keeps hoping the debtor will come right, and somewhere in the middle of that process the three-year mark passes without anyone noticing.
Here is what does not interrupt prescription:
- Sending statements or invoices
- Making phone calls demanding payment
- Sending emails or WhatsApp messages
- Handing the account to a debt collector after the deadline has already passed
- The debtor verbally promising to pay without putting it in writing
None of those actions reset the clock. The debt continues to age toward the three-year mark regardless, and if it crosses that line, it is gone.
What actually interrupts prescription
The Prescription Act recognises only specific acts that interrupt (reset) the three-year period:
1. An acknowledgement of debt in writing by the debtor
This is the most practically useful interruption. If the debtor signs a written acknowledgement that they owe the amount, or sends an email confirming the balance, or signs a payment arrangement, the three-year period restarts from the date of that acknowledgement.
This is why debt collectors and attorneys put such emphasis on getting something in writing from the debtor. A single email from a debtor saying “I know I owe you R80,000, I’ll pay next month” is worth more than a year of phone calls, because it resets the clock entirely.
2. A part payment by the debtor
Any payment, no matter how small, constitutes an acknowledgement of the debt and interrupts prescription. The clock restarts from the date of the last payment. This is also why some creditors accept token payments from difficult debtors: not because R500 on a R200,000 debt matters financially, but because it keeps the claim alive.
3. The service of legal process (summons)
Issuing and serving a summons on the debtor interrupts prescription. The claim is preserved for as long as the legal proceedings continue.
The practical 60/90 rule
Debt that is handed over to a professional collector within 60 to 90 days of falling due recovers at a substantially higher rate than aged debt. The reasons go beyond prescription:
- The debtor still has cash flow. A business that owed you money two months ago is far more likely to be able to pay than one that owed you money two years ago.
- The paper trail is intact. Invoices, delivery notes, signed agreements, and email correspondence are all still accessible and complete.
- Avoidance has not hardened. A debtor who has been dodging you for 60 days can still be brought to the table. A debtor who has been dodging you for two years has built an entire routine around it.
- Contact details are current. Businesses move, change phone numbers, and deregister entities. The longer you wait, the more likely you are to need tracing before recovery can even begin.
The 60-to-90-day window is not a legal deadline: it is the practical window where recovery works best. Beyond it, every month that passes reduces the realistic prospects.
What to do if your debt is approaching three years
If you have an outstanding commercial debt that fell due two years ago or more, treat it as urgent. Do not wait for the debtor to respond to another email.
Step 1: Calculate the exact due date. Not the invoice date, the date payment was contractually required. If your terms were 30 days, the due date is the invoice date plus 30 days.
Step 2: Check whether anything has interrupted prescription since that due date. Did the debtor acknowledge the debt in writing at any point? Did they make any payment, even a partial one? If so, the clock restarted from that date.
Step 3: If the three-year mark is approaching and nothing has interrupted it, contact a registered debt collector or attorney immediately. A formal demand that produces a written acknowledgement from the debtor will interrupt prescription. If that is not achievable, the service of a summons will preserve the claim.
Step 4: Do not attempt to interrupt prescription yourself by fabricating an acknowledgement or pressuring the debtor into signing something under duress. An acknowledgement obtained improperly is challengeable, and trying it creates more problems than it solves.
What happens once a debt has prescribed
Once prescription is complete, the debtor has a full defence against any legal action to recover the debt. You can still ask them to pay voluntarily, but you cannot compel payment through the courts.
There is one narrow exception. If a debtor voluntarily pays a prescribed debt, they cannot later claim the money back on the grounds that the debt had prescribed. But “voluntarily” is doing a lot of work in that sentence: a debtor who pays under pressure or without knowing the debt had prescribed may have grounds to reclaim.
The realistic position is that once a commercial debt prescribes, the money is gone. That is the hard truth that makes early action so important.
Prescription and the Council for Debt Collectors
A registered debt collector operating under the Debt Collectors Act 114 of 1998 is required to act within the law, including the Prescription Act. A competent collector will assess the prescription status of every account before accepting an instruction, and will tell you honestly if a debt has already prescribed or is about to.
Be cautious of any collector who accepts an instruction on a clearly prescribed debt without flagging it. They are either incompetent or hoping you will not notice when recovery fails.
The bottom line
Three years. That is the window for most commercial debts in South Africa. Within that window, a registered debt collector with the right approach recovers the clear majority of matters. Outside it, the law offers no remedy regardless of the merits of your claim.
The single best thing you can do for your cash flow is to stop treating overdue accounts as a filing problem and start treating them as a deadline. Hand them over within 60 to 90 days, and the numbers work. Wait too long, and the Prescription Act does the rest.
