3 Leading ways to navigate the fiscal adversities facing South Africa’s economy
South Africa entered into a technical recession after two consecutive quarters of poor growth. According to Statistics South Africa, the economy shrank by 0.7% in the second quarter of 2018. This prompted political and economic role players to act quickly in order to avert a possible ratings downgrade. In addition to that, the cost of fuel has sky-rocketed to unprecedented levels recently.
For its part, the government, under President Cyril Ramaphosa, announced a wide-ranging series of interventions meant to bring the economy back onto its growth path. Likewise, companies of all sizes and in all sectors need to ensure that they have strategies in place to survive through these turbulent times. Here is some sage advice that will help you ride the recession wave, and assist you to succeed despite it.
- Explore different supplier options
One certain way to decrease costs, is to cut the cost of the supply. Prices are not necessarily set in stone and many vendors are willing to negotiate lower prices, especially if you have developed good relationships with reliable sales reps. Having a constant contact person creates opportunities for those sales reps to adjust your order details and get you the best possible deals. Or perhaps, now may be the time to start looking for other suppliers, who are able to deliver what you require at better costs.
- Expand to new territories
While this may sound counter-intuitive and cause one to question why anyone would want to expand when the economy is uncertain, it actually makes great business sense.
Expanding into new markets could open up new cash flows and opportunities for business growth. In addition, working with countries that have stronger currencies will give you a leg up in the business arena. Contact Credit Guarantee to gain access to our leading research on new, emerging and existing markets throughout Africa and how best to penetrate the market and succeed.
- Cash is king
Maintaining positive relationships with clients requires a certain level of flexibility, but you cannot afford to allow too many customers to take more than the standard 30 days to pay for your products or services.
Extending already-lengthy payment terms can cause a dangerous cash flow squeeze on your end. It’s possible to make a profit on paper but still go out of business if you don’t have the steady income necessary to cover your own expenses. In addition, there are no guarantees that some companies will still be in business tomorrow!
Thankfully with Credit Guarantee, you can protect your company against such hazards as non-payment or late paying clients, while still preserving customer relationships and your company’s reputation.
If your customers are unable to pay your invoices and settle their debt, having trade credit insurance will enable your company to remain operational because your trade credit insurer has taken care of the liability. Find out how to get covered with a domestic trade credit insurance policy from Credit Guarantee – South Africa’s leading trade credit provider.
Credit Guarantee is an authorised financial services provider FSP licence number 17691.