August 31, 2017
debtor finance

Does debtor financing still retain its stigma?

  Debtor financing houses, most notably controlled by South Africa’s biggest banks, have gone a long way over the past few years to rid the industry of the stigma attached to debtor financing. Yet, a number of credit extension professionals still view applications from potential debtors that have elected to finance their receivables as risky, according to Frank Knight, MD of Debtsource – a credit management outsourcing company. “Trade credit lenders are often of the opinion that debtor financing is a financing arrangement of last resort, and are therefore dubious of the liquidity of the business and their customer’s ability to settle accounts timeously.” Knight says that there can be […]
June 27, 2017
business fail

Why do profitable businesses still fail?

  Where your business’ accounts are concerned, profit and cash-flow are key financial measurements. However, many business owners aren’t aware that they are not directly linked, nor are they both equal measures of success. Profit is a measurement of a company’s sustainability on an ongoing basis, while cash-flow is a measure of a company’s ability to pay its bills when they are due. When there is a lack of cash resources, usually tied up in receivables or written off to bad debts, a company is vulnerable to failure, no matter what their perceived profit. Cash is the essence of a business and ideally, a business needs to generate enough cash […]
June 27, 2017
safeguard against season slump

Safeguard your business from the seasonal slumps

It’s been seen that time and time again the start of a new year can be a testing time for many South African businesses. January is almost always the leanest month for most companies as they cope with poor cash flow and increased outstanding debtors. Those reliant on client payments to boost their cash flow may be faced with account departments shutting down over December, causing payments to be later than ever before. The reality is that some businesses may have generated strong sales in November and December but they are not paid until February or March. That plays havoc with cash flow and means that financially, you’re starting the […]
April 24, 2017
risky market conditions

Granting credit not for the fainthearted

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 […]