Credit Guarantee

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What must I do if an account is overdue for payment?
You should carry out your own credit control collection procedures without any reference to us prior to sending out a final demand.

- Not later than 90 days after due date or any postponed due date, in respect of any amount owing on open account. You need not wait for the expiry of 90 days before sending the final demand - it can be sent at any time before the 90 days at your discretion.

- Immediately as you become aware of any dishonoured cheque, bill or other negotiable instrument.

What information must I include in the final demand?
In order that the buyer becomes aware of our involvement, it is essential to incorporate a paragraph along the following lines in your final demand:

Unless payment is received within 21 days from the date of this letter, we shall be obliged to report your default to Credit Guarantee Insurance Corporation of Africa Limited who, in turn, will advise the International Union of Credit Investment Insurers of your non-payment. Legal action will also be instituted against you without any further notice.

Since a copy of your final demand will form the basis of our instructions to our attorneys if legal action becomes necessary, it is important that the demand includes the following:

Your correct name and physical address, so it would be advisable to use your letterhead for the final demand.
The full name of the buyer in order to establish the correct legal entity (company, partnership etc.) as well as the buyer's physical address.
Details of the outstanding amount showing, for each month of shipment, the total amount invoiced and the due date of payment.

What if a collecting bank is involved?
Where a collecting bank is involved, ensure that the bank is instructed:

to note and protest the non-payment of any bill of exchange or other negotiable instrument;
to confirm as soon as possible after the expiry date stipulated in the final demand, whether or not payment in local currency has been made by the insured buyer.

What must I do if the buyer ignores the final demand?
If the amount still remains unpaid after the date stipulated in the final demand or if the collecting bank confirms that it has not received payment in local currency, you must complete the claim form (see link below) and send it to us (together with a copy of the final demand and any supporting documentation evidencing the unpaid insured debt) within 15 days after expiry of the final demand period.

What further action must we take?
Nothing at this stage. You will be informed once we have instructed an attorney or collecting agent to proceed. We will also give you a claims reference number which you must quote in all correspondence referring to this collection.

Naturally, we shall keep you informed of the progress made by our attorneys or collecting agents.

What should I do if the buyer offers payment after you have instructed your attorney?
You may accept the payment without prejudice and with reservation of all your rights. Your attorney and Credit Guarantee must be advised of the payment received.

May I instruct my own attorney to take legal action against a defaulting debtor?
Normally all legal proceedings shall be conducted by our nominated attorney and counsel (refer proviso 18). You may use your own attorney only if Credit Guarantee has given its consent in writing and if your policy has been endorsed to this effect.

What happens after we have instructed our attorneys?
Within 15 days of the instruction, you must complete the claim form and send it to us. You must keep us informed of the progress made with the legal action instituted, by sending us copies of all correspondence between your attorney and yourselves.

Who must pay unrecovered legal costs?
Where we have instructed an attorney on your behalf, any unrecovered legal costs will be shared between us on a pro rata basis, according to our respective interests in the amount handed over for collection. Normally, this would amount to our paying the insured percentage of legal costs incurred.

In cases where you have instructed your own attorney, the same will apply provided that the required final demand (incorporating the paragraph referring to our involvement in the outstanding amount) was sent to the defaulting buyer before you handed the matter over to your attorney, and provided that you have informed us of this action.

Should Credit Guarantee not be on risk, all unrecovered legal or collection costs will be for your own account.

What is Credit Guarantee's attitude with regard to trade disputes?
We realise that disputes do occur in business, but you will appreciate that we do not have the technical knowledge needed to adjudicate on a trade dispute, particularly when it concerns the question of quality. For this reason, we have little choice but to ask you to try and settle the dispute in your favour before you lodge a claim against us.

How are payments in respect of overdue accounts allocated?
Any payment made in local currency.

- received by way of legal proceedings, will be allocated to the insured debt and any uninsured portion on a pro rata basis.

- received in any way other than by legal proceedings, will liquidate the outstanding amounts which have fallen due first.

What must I do in the event of an insured buyer's liquidation, insolvency, judicial management etc?

The moment you become aware of the order being granted against the buyer, immediately complete and send us a claim form (see link).

Click here to view the form (Sample)
If the buyer has already been handed over to your attorney for collection of an overdue amount, you must immediately instruct the attorney to close his file.
Send us copies of all circulars or other correspondence received from the liquidator or any other legal representative.
Proceed to have your claim lodged and admitted to the insolvent estate, provided that there is no danger of any contribution being levied. If you have any doubt in this regard, please contact us before lodging a claim against the estate.

Must I refer offers of compromise to you?
Yes, all offers of compromise, whether formal or informal, must be referred to us before any acceptance or rejection. We shall then weigh up the merits of any offer and, in conjunction with you, decide upon its acceptability or otherwise.

What must I do in the event of any other actual or threatening cause of loss?
Immediately complete a claim form (see link) and send it to us.

Click here to view the form (Sample)

We will then check our information and consult with you over the action to be taken.

Can I continue making deliveries to a buyer who is overdue for payment?
You may do this under cover of your policy only if -

the overdue amount is not more than 60 days overdue for payment (note that, in respect of certain buyers, the credit limit may reduce the 60 days (please be guided accordingly), and/or
a cheque, bill or other negotiable instrument received from the buyer has not remained unpaid for more than 30 days, and/or
payment in respect of previous insurable transactions involving the same insured country have been received in the country of sale within two months after payment in local currency, and/or
you are not aware of any other information which would suggest that the buyer is in financial difficulties or that a cause of loss has occurred or is about to occur.

If any further deliveries are made under contrary circumstances, they will not be covered under your policy (see proviso 8 - Automatic suspension of cover).

What must I do if I receive an adverse report about an existing buyer?
You must inform us immediately and at the same time advise us of any amounts owing to you. If we feel that specific action should be taken to collect the outstanding amount, you will be advised accordingly.

What must I do if a buyer asks for postponement of the original due date?
Provided that the request for an extension is received on or shortly before the original due date, you may grant a postponement of not more than 30 days without any reference to us. You are required to retain written proof of extensions granted.

Any request for a postponement of more than 30 days must be referred to us for our written approval.