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Administration Guide - Credit Limits
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What is a credit limit?
It is the maximum amount covered in terms of the policy on a particular buyer for any cause of loss as covered in your policy. This maximum amount could be confirmed to you by way of a credit limit annexure issued by us, or a limit of discretion by you in terms of your policy.
Why are credit limits required?
Since we are carrying the majority of the payment risk, it is not unreasonable that we should be able to exercise some control over the amount of credit we insure for 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 three ways:
- By making use of Cregalink our online interactive service
- 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 Sample Form
What is a "limit of discretion"?
A limit of discretion is the maximum amount of credit that you may grant an individual buyer without first obtaining our approval. Once properly established the limit of discretion is a credit limit as if it were issued by us.
A limit may not be established under your limit of discretion where we have issued a 'nil' limit with comment E and, where we have issued a credit limit lower than your limit of discretion; the limit we issued will be the limit in force.
You may not use your limit of discretion in respect of a government buyer. 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 for us, if in terms of the policy you had to apply to use 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?
The level of credit must be justified by:
- Your favourable experience with the customer in question during the preceding 12 months, evidence by a satisfactory payment record involving at least four separate insurable transactions, or
- A written bank or information bureau report (not older than six months at the date of shipment) commencing favourably on the buyer and the amount of the limit established
When must I apply 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 structure 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.
Failure to offer all qualifying buyers may impact on the payment of claims. If you are uncertain as to which buyers should be offered for cover or if you require a copy of the policy document, please contact us and this will be delivered to you at no charge.
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.
What happens in response to a Credit Limit Application?
The value and terms on which we are prepared to offer cover is stipulated on a Credit Limit Annexure which will be sent to you. Alternatively you may view the same information on Cregalink. Please have regard for any special condition reflected on the Credit Limit Annexure as well as the comment. A key to the comment may be found on the reverse side of the Credit Limit Annexure.
What happens if we trade in excess of the value stipulated on the Credit Limit Annexure?
This will effect the calculation of the indemnity in the event of a claim.
How do I obtain a credit limit?
In one of two ways:
- If the credit requested is not higher than your limit of discretion shown in the schedule of your policy, you may grant the credit limit yourself without our approval
- Where the credit request is higher than your limit of discretion, you must apply on a credit limit form (see link).
Click here to view the Sample Form
What do I do when I need a credit limit decision very urgently?
Use our paid response system to obtain an urgent credit limit decision. The rapid response system can only work properly if you give us the full details (including trading styles) of the buyer and his bankers. Applications should be faxed to use, clearly marked "urgent". Unmarked applications will be treated as normal/non-urgent.
Is there a charge for using the rapid response service?
For each decision faxed to you within five working days, a once-off standard nominal fee is debited to your account at the end of the 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.
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