Domestic Pre-delivery Policy Administration Guide - Credit Limits What is a Credit limit? Why are credit limits required? How do I obtain a credit limit? What is a "limit of discretion"? Why does a policy have a limit of discretion? How can I approve a limit under the limit of discretion? When must I apply to you for credit limits? What information do I need to apply for a credit limit? more >> . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . What is a credit limit? It is the maximum amount insured on a particular buyer that will be covered in terms of the policy. Why are credit limits required? Since we are taking over from you most of the payment risk, it is not unreasonable that we should be able to exercise some control over the amount of credit you give to individual buyers. It also protects your own interests because you carry the balance of the risk. How do I obtain a credit limit? In one of two ways: By establishing a limit under your limit of discretion. By applying to us for a credit limit, using the credit limit application form  Click here to view the form (Sample) What is a "limit of discretion"? A limit of discretion is the maximum amount of credit that you may grant an individual buyer, under the cover of your policy, without first obtaining our approval. The limit of discretion that you enjoy is shown in the schedule to your policy. Why does a policy have a limit of discretion? It would be very time-consuming, both for you and us, if in terms of the policy you had to apply to us for the approval of credit granted to each and every buyer, regardless of the level of credit required. The limit of discretion therefore reduces the administration required. How can I approve a limit under the limit of discretion? You will be able to do this provided that: - you have a written bank report (not older than six months) on the buyer, giving a code A, B or C for an amount not less than the limit established by you and provided that the bank code does not evidence any previous cheques having been returned "refer to drawer". The limit under your limit of discretion must have been validly established in terms of the above before any new delivery is made. When must I apply to for a credit limit? - Upon the issue of your policy, when application must be made for credit limits on all your existing buyers who fall within the cover offered under the policy and who owe (or are likely to owe) more than your limit of discretion. - As soon as the first contact is made with new buyers who fall within the category of accounts which are covered under the policy and who are likely to owe you more than the limit of discretion. In this way, you can obtain an early check on the creditworthiness of potential buyers. - If an existing credit limit is too low to cover amounts owing to you by any buyer, then you should apply to us for an increased credit limit as soon as possible. What information do I need to apply for a credit limit? All details requested on the credit limit application form (see link above) are required for each application. The processing of your request for a credit limit may be delayed if your application form does not contain all the information requested.
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