Credit Guarantee

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Is Credit Guarantee entitled to impose special conditions on a credit limit?
Yes. These will be shown in the credit limit annexure. For instance, a condition may stipulate that terms of payment that are less favourable to you than cash against documents, will not be covered by the limit. You must take note of special conditions contained in a credit limit as shipments made on conditions which contravene, or are less favourable than those laid down, are not covered.

Can Credit Guarantee withdraw or reduce a credit limit?
Yes. We do this where the buyer's position has deteriorated and the level of credit previously approved has become excessive. Shipments made before the limit was withdrawn or reduced are not affected by the reduction/withdrawal.

From what date is a credit limit effective?
A credit limit covers shipments made on or after the date it was issued. It also covers shipments made before the date of its issue provided that -

at the date of application for the limit no amounts owing by the buyer were overdue for payment, and
application was made before or shortly after shipment.

How long does it take for a credit limit to be issued?
In some cases we will already have detailed information on the customer concerned, in which event a limit can be approved almost immediately. If we have to get information from our contacts abroad, the speed of their replies depends on the conditions prevailing in the country concerned. It takes anything from a few days to a number of weeks for a reply to be received. You can help a lot by applying for a limit as soon as an inquiry is received from a potential customer, and by giving us the full details required.

What must I do if I receive an order for more than the credit limit?
First approach us for an increase in the limit. As information on the buyer should already be available, a decision can normally be made without delay - unless the increase asked for is very large compared to the original limit. If we are unable to agree on an increase, you are still entitled to execute the order(s) but any indemnity subsequently paid by us will be based only on the amount of the credit limit actually granted. Our inability to increase a limit should be regarded as a warning to exercise caution in dealing with the buyer concerned at the higher level contemplated.

What if a credit limit has been exceeded and payment is then received which reduces the balance outstanding to the amount of the limit or less?
Provided the payments were received at a time when the buyer's account was not in automatic suspension of cover (i e 60 days or more overdue), the full amount outstanding would be covered provided that the excess above the limit was declared for premium purposes once and to the extent that the excess is brought within the credit limit, e g:

Amount of limit . . . . . . . . . . . . . . . . . . . . . . .R1 000
Amount outstanding . . . . . . . . . . . . . . . . . . . R1 200
Payment received . . . . . . . . . . . . . . . . . . . . . .R 400
(R 200) must be declared
Amount covered . . . . . . . . . . . . . . . . . . . . . . .R 800

However, if payments are received after the buyer's account went into automatic suspension of cover (ASOC), these payments will be deducted from the credit limit amount and could result in the cover being expunged, e g :

Amount outstanding . . . . . . . . . . . . . . . . . . .R1 200
Amount of credit limit . . . . . . . . . . . . . . . . . .R1 000
ASOC occurs: Payment received . . . . . . . . . . .R400
Amount covered . . . . . . . . . . . . . . . . . . . . . . . R600

Is a credit limit necessary for one of my own subsidiaries or associate companies?
Yes. The policy covers only the risks of importation, transfer and conflict in respect of shipments to associated buyers. The risks of insolvency, protracted default and repudiation are, therefore, excluded.

What if there is a loss and no credit limit has been issued for the buyer concerned?

If no credit limit has been established for the buyer, no indemnity will become payable in the case of a cause of loss.
If the credit was granted by you under your limit of discretion, you will be covered if you can show that the credit given was justified by your previous favourable experience with the customer or that you obtained a satisfactory status information report within six months of granting the credit from a registered bank or credit investigation bureau (or any other stipulations/conditions which may be included in your policy by way of endorsement).
Where you granted credit for an amount above the limit of discretion and no credit limit had been issued for the buyer, then an indemnity will be limited to the insured percentage of the amount of your limit of discretion, provided you have complied with the relevant provisions of the policy for granting credit under the limit of discretion.

Note: In addition to the above special requirements, payment of a claim will depend on your compliance with all other conditions of the policy.

How much does a credit limit cost me?
You will find the relevant information in the schedule to your policy under Credit limit fee. This fee will be charged monthly for each credit limit in force, but not on "nil" or replaced credit limits.

Information regarding credit limits is available on CregaLink (your direct link to Credit Guarantee's computer)

What is the most convenient way to ensure that I hold sufficient credit limits to cover outstanding accounts?
If you are not linked to CregaLink, please phone us to get connected.
Make a note of the credit limit annexure numbers and amounts on the relevant debtors' ledger cards or incorporate the information in your computer system.