credit managment tips
Credit Management tips for tough times
July 22, 2019
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The end of bank codes?

Over the past few years there have been persistent rumours that South African banks will no longer be providing bank codes. In October 2019 this possibility became a reality when Citibank and Investec announced that they will not be supplying codes. Following this, Standard Bank announced that they will also not be providing bank codes with effect from 1 November 2019. While none of South Africa’s other big banks have yet followed suit, it is expected that they may well do so in the near future.

Bank codes have been a uniquely Southern African phenomenon for many years, as international banks do not provide bank codes. Local credit providers in especially trade credit have long relied on this information as part of their credit assessment routine, especially in an environment where financial statements are not available to assess credit affordability.

While many credit grantors have questioned the impartiality and the importance of the codes for some time they have been very valuable in assessing credit transactions, especially when negative information was provided. Statistically 80% of bank codes obtained were code “C”, but of greater importance were the 3,5% of codes received where the code reflected negatively (codes D, G and H).

Without bank codes to help assess credit worthiness, more focus will shift to assessing financial statements, establishing payment trends, checking adverse information and doing debtor visits on larger credit facility applications.

Debtsource is optimally geared to continue providing effective credit assessments without bank codes. Our insistence on ensuring effective documentation; supplier payment trends, adverse information, debtor visits, and the ability to assess financial statements (benchmarked to industry norms) places our solution in a preferred position to continue providing accurate credit assessments for our client base, ensuring minimal write-offs and maximum profitability.