Domestic Turnover Policy Administration Guide - Credit Limits How will I be told of the credit limit approved? What is meant by special conditions attached to credit limits? How long does it take for a credit limit annexure to be issued? What do I do when I need a credit limit decision very urgently? Is there a charge for using the rapid response service? What amount should I ask for when I apply for a credit limit? Is there any danger in applying for unrealistically high credit limits? Must I apply for a new credit limit for each new order by a buyer? When applying for an increased credit limit, must I inform you of the new limit needed, or only of the increase needed? Will my experience with a buyer be taken into account? more >> . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . How will I be told of the credit limit approved? We send you a credit limit annexure which confirms the amount approved as well as any special conditions attached to the cover approved. If we can't cover the buyer at all, we'll send you a "Nil" annexure in confirmation of this. Please note: If we issue a "Nil" credit limit with the comment "E" you will not be covered for any subsequent deliveries made to the buyer under your limit of discretion. What is meant by special conditions attached to credit limits? In some cases we may not be able to approve any credit limit on a buyer without attaching one or more special conditions. For example, we may require that payment for all transactions with the buyer concerned should be guaranteed by a particular third party. Take careful note of any special conditions attached to a credit limit; if these are ignored or only partly fulfilled, the credit limit will not be valid and your deliveries will not be covered. How long does it take for a credit limit annexure to be issued? About 80% of all credit limit annexure's are issued by us not later than one week after the application has been received in our offices. What is the problem with the remaining 20%? - Mainly the lack of the necessary information needed on a buyer, before we can take a responsible credit decision. If we have to get the information from outside contacts, it can take anything from a few days to several weeks. You can assist by applying for a credit limit as soon as an enquiry is received from a potential buyer and by carefully completing the credit limit application form, giving all information requested. What do I do when I need a credit limit decision very urgently? Use our rapid response service to obtain an urgent credit limit decision, i e within one to three working days from receiving your fax. Applications, in the format shown in the link below, should be faxed to us, clearly marked. Unmarked applications will be treated as a normal written application. Is there a charge for using the rapid response service? For each decision faxed to you within one to three working days, a one-off standard nominal fee is debited to your premium account at the end of each month. Unless you have been advised of any increase, the fee is the one advised to you in your covering letter at the time of the issue of your policy. What amount should I ask for when I apply for a credit limit? The amount should reflect more or less the maximum amount owing or likely to be owing by the buyer concerned at any one time. For example: Buyer X buys goods to the average value of R10 000 from you every month. He pays at 60 days. The maximum amount outstanding at any one time should therefore be approximately R30 000, bearing in mind that by the time the fourth order is dispatched, you should have received payment for the first. Allowing for a small margin, you should apply for a credit limit of R35 000. Is there any danger in applying for unrealistically high credit limits? Yes. If you apply for amounts which are completely unrealistic we may issue a "Nil" annexure instead of a credit limit for an amount which we feel is more in keeping with the buyer's financial position. For example: If a limit of R50 000 was asked for when R5 000 would have been adequate for your needs, we might issue a "Nil" credit limit despite our willingness to approve (say) R5 000, as we would feel that such a limit would not serve much purpose at the level of business indicated. However, an application for R5 000 would have been approved! Must I apply for a new credit limit for each new order by a buyer? No. A credit limit is "revolving", that is to say, as earlier deliveries are paid for by the buyer, further deliveries can be covered. It remains in force for the life of the policy or until it is replaced by a subsequent credit limit or until it is withdrawn by us. In certain cases, however, credit limits are only valid in respect of deliveries made before a specific date which will be notified to you on the special condition to the credit limit annexure. If the period has expired, a new limit must be applied for if further deliveries to the buyer are likely to be made. When applying for an increased credit limit, must I inform you of the new limit needed, or only of the increase needed? The application form must show the amount of the total new credit limit needed, not the amount of the increase. Will my experience with a buyer be taken into account? Certainly. If we are unable to approve the credit limit you require on a particular buyer, you should re-approach us if you feel there are special circumstances, based upon your past experience with the buyer, which we should take into account when assessing the risk.
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