Revenue & Debt
Interest on Overdue Accounts
Interest and penalties levied on arrears versus amounts actually collected on those charges.
Why interest on arrears is reconciled
Interest and penalties levied on overdue accounts are recognised as revenue under GRAP, but if they are rarely collected they simply inflate the debtors book and the required impairment. The gap between interest charged and interest collected is a sharp test of credit-control effectiveness and revenue realism. AuditPro Core reconciles interest levied on arrears against amounts actually collected so the financial statements reflect recoverable, not notional, income.
The Numbers
AuditPro Core renders this view from your tenant's live, tamper-evident records. The figures below are illustrative sample data.
Interest Raised
R 88.2 m
on arrears
Interest Collected
R 11.4 m
12.9%
Interest Impaired
R 71.0 m
80.5%
Effective Rate
Prime + 1%
Interest raised vs collected by quarter (R m)
Interest by debtor category
| Category | Raised (R m) | Collected (R m) | Impaired (R m) |
|---|---|---|---|
| Residential | 52.1 | 6.4 | 42.8 |
| Business | 24.6 | 3.9 | 18.9 |
| Government | 11.5 | 1.1 | 9.3 |
Figures shown are illustrative sample data for demonstration. AuditPro Core renders these views from your own tenant's live, tamper-evident records.
Interest is revenue, but only if real
Penalty interest on arrears meets the GRAP definition of revenue when levied. Recognising it without regard to collectability overstates income and inflates impairment in equal measure.
Charged versus collected
The proportion of levied interest actually collected reveals whether credit control is working. A low collection rate means the charges are punitive on paper but ineffective in cash terms.
Compounding the arrears problem
Uncollected interest compounds on accounts already in arrears, accelerating the growth of irrecoverable debt. This can trap indigent consumers and bloat the impairment provision.
How AuditPro Core Bridges the Gap
- Levy reconciliation: interest charged on arrears is reconciled to interest actually collected.
- Collection-rate flagging: low recovery on levied interest is raised for credit-control review.
- Impairment linkage: uncollected interest feeds the expected-credit-loss provision realistically.
- Account traceability: interest charges trace to the underlying arrears accounts.
Key Takeaways
- Penalty interest is GRAP revenue but only realistic if collectable.
- The charged-versus-collected gap tests credit-control effectiveness.
- Uncollected interest compounds arrears and inflates impairment.
- Recognise interest with a realistic view of its recoverability.
See This on Your Own Data
AuditPro Core renders this dashboard from your tenant's live, tamper-evident records — every figure traceable to source.