Chasing Unpaid Invoices: Letter of Demand to Court

Chasing an unpaid invoice in South Africa follows a fixed ladder: a formal letter of demand, then the Small Claims Court for debts up to R20,000, the Magistrates' Court for R20,001 to R200,000 (regional court up to R400,000), and the High Court above that. Two clocks run while you wait: prescribed interest starts when you demand payment, and the whole debt dies three years after it fell due. Here is each rung, with the deadlines that matter.‍‌‌​​​‌​‌‌​‌‌​‌​​‌​‌‌‌​​​​‌‌​‌​‍

Step 1: the letter of demand

Before any court will hear you, send a formal letter of demand. It is a legal prerequisite for the Small Claims Court and it starts interest running. Include:

• Full details of both parties.
• The amount owed, referencing the invoice and contract.
• The legal basis (the contractual obligation to pay).
• A payment deadline, customarily 7 to 14 days.
• A clear statement that legal action follows if the deadline passes.
• Your signature and the date.

Send it by registered mail or hand-deliver it against a signed acknowledgement, and keep the proof of delivery. The court will ask for it.

Step 2: Small Claims Court (up to R20,000)

The Small Claims Court is the DIY option, designed to work without lawyers:

• Limit: R20,000. An increase to R50,000 is under active consultation, so check the current limit on the Department of Justice site at justice.gov.za before you file.
• Natural persons only may sue there. A Pty Ltd or CC cannot bring a claim in the Small Claims Court (it can be sued there). If you trade through a company, your route is the Magistrates' Court.
• No lawyers allowed, for either side. A commissioner hears both parties informally.
• Filing costs roughly R100.
• Process: letter of demand, wait 14 days, then go to the clerk of the court to issue a summons, serve it on the debtor, and attend the hearing.

Tip: if your claim is slightly over the limit, say R22,000, you may abandon the excess and claim R20,000 in the Small Claims Court. You permanently give up the difference, but you may get paid months sooner without legal fees.

Step 3: Magistrates' Court and above

• R20,001 to R200,000: the district Magistrates' Court. You issue a summons, the Sheriff serves it, and if the debtor does not defend you apply for default judgment, then a warrant of execution. Most tradies use an attorney here; costs are recoverable from the debtor if you win.
• Up to R400,000: the regional Magistrates' Court.
• Above R400,000: the High Court.

The 3-year prescription trap

Under the Prescription Act 68 of 1969 (text on SAFLII), an ordinary contractual debt prescribes three years after it became due. Once prescribed, it is gone: you cannot sue on it at all.

Prescription is interrupted (the clock resets) when:

• The debtor acknowledges the debt. Even a small part-payment counts.
• You serve a summons on the debtor.

Letters, calls and promises do not interrupt prescription unless they amount to an acknowledgement by the debtor. Prescription can also be delayed in limited cases, for example while the debtor is outside South Africa or while the dispute sits in arbitration. The practical rule: if an unpaid invoice is approaching three years old, issue a summons now, not another letter.

Prescribed interest

If your contract names an interest rate, that rate applies. If it is silent, the Prescribed Rate of Interest Act 55 of 1975 (text at gov.za) fills the gap. Since 2016 the prescribed rate is the South African Reserve Bank repo rate plus 3.5%. As at late May 2026 that works out to 10.50% per annum (repo 7.00% plus 3.5%). The rate moves whenever the repo rate moves, so always check the current repo rate at the SARB before you calculate.

When does interest start?

• On a judgment debt, automatically from when the judgment debt is payable.
• On a disputed (unliquidated) amount, from the date you formally demand payment or serve a summons, whichever comes first.

That is another reason to send the letter of demand early: it starts the meter.

Worked example

Lungile finishes a R35,000 plastering job on 1 January. The client pays nothing. On 8 January she sends a registered letter of demand giving 14 days; prescribed interest starts running from that demand. On 22 January, with no payment, she instructs an attorney to issue a Magistrates' Court summons (the claim is over R20,000, and her business is a CC, so the Small Claims Court is out anyway). In March the court grants default judgment for R35,000 plus interest plus costs, and the Sheriff attaches the client's bakkie under a warrant of execution. Had Lungile instead sent polite reminders for three years, the debt would have prescribed and been unrecoverable.

Common mistakes

• Skipping the letter of demand. It is a Small Claims prerequisite and it starts interest.
• No proof of delivery. A demand you cannot prove was received is worth little.
• Suing in the wrong court. Companies cannot claim in the Small Claims Court; oversized claims get bounced.
• Letting prescription run. Reminders do not stop the three-year clock. Only a summons or the debtor's acknowledgement does.
• Hardcoding old interest rates. The prescribed rate tracks the repo rate; check it on the day you calculate.

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