Extending trade credit facilities in volatile and risky market conditions is not for the fainthearted With South Africa’s economic position in a precarious state, particularly since the downgrade to junk status, many businesses may find themselves in a pickle over credit management. Chief executive of Debtsource, Frank Knight, says that with the ratings downgrade, banks are likely to clamp down on providing financing and loans, propelling companies to seek credit from their suppliers to strengthen their business opportunities. That has massive implications which need to be fully understood. “Companies often rely on banks to finance their businesses or obtain trade debtor finance. Usually it is a combination of both. When […]

Few people realise that the largest source of business funding in South Africa is provided by private companies themselves. Businesses extend credit to their customers and obtain credit from their suppliers, usually in the form of short-term funding which lasts for 30 to 60 days per transaction. This form of funding helps businesses both large and small to effectively manage their cash flow and diminishes the need for bank or state institution funding. Known as “trade credit”, many of these transactions are secured using trade credit insurance companies and the funding system operates as an efficient mechanism that facilitates enormous trade volumes in our country. The effect of a ratings […]

The credit management solution specialist Debtsource announced a new selected debtor insurance offering brokered for Hollard Trade Credit, which will be underwritten by Hollard Insurance. After extensive investigation into the current trade credit insurance market, Debtsource and Hollard have teamed up to offer a new product that gives clients the choice of insuring individual trade debtors, rather than only selecting comprehensive cover. The new product intends to minimise the risks resulting from non-payment when businesses extend credit to each other by way of goods sold or services rendered. Premiums will now be based on the risk grading of the debtor, rather than on prior claims or perceived industry risk. In […]

There can be little doubt that South African companies are having a tough time. The local and global economy is growing at a snail’s pace and the business confidence index fell to a seven-year low in the second quarter of 2016. Obviously more companies are going into liquidation – correct? Not so! According to Stats SA the number of companies being liquidated has been in steady decline since it peaked in 2009. In that year just over 4100 businesses were liquidated, and this number has steadily decreased to just under 2000 in 2015. In the first six months of 2016 only 930 liquidations were recorded and at the current pace […]