With South Africa’s current economic conditions and the news that we have recently entered a ‘technical recession’, on top of the recent ratings downgrades, it has become increasingly important to make sure your company is covered and protected against certain political and commercial risks that are beyond your control.
What Is Trade Credit Insurance?
It is an insurance policy and a risk management product for short-term accounts receivables offered to companies.
Why Your Company Needs Domestic Trade Credit Insurance
If you conduct business in South Africa on a credit basis, here are six reasons why you need to get domestic trade credit insurance from Credit Guarantee.
1. Secure your debtors book
Your domestic trade credit insurance policy with Credit Guarantee secures one of your most valuable assets – your debtor’s book. It offers your company protection against the non-payment of debts due to various reasons such as insolvency, or payment defaults incurred by debtors domestically or in the common monetary area. Based on the policy you select, you can get cover if your debtor cannot pay due to:
- A provisional compulsory sequestration order;
- Provisional acceptance by the court of a voluntary surrender of estate;
- A provisional winding-up order;
- Acceptance of a statutory compromise or scheme of arrangement binding on all creditors;
- A provisional judicial management order;
- Protracted default – when your customer fails to pay their debt within six months from the due date;
- Business rescue – the formal process for the rehabilitation of financially distressed companies under Chapter 6 of the Companies Act
2. Get expert assessment of your credit risk
At Credit Guarantee, we will share our wealth of knowledge built up over 60 years of operating and leading in domestic trade credit insurance in South Africa. We will assist your company in assessing your customer’s risk of default, on an obligation.
Armed with the information that a potential customer may fail to meet their obligations in accordance with agreed terms, you will be able to distinguish between customers and make smarter decisions on who you make credit arrangements with. We will assist you to continually improve the quality of your customers and this could result in a lower incidence of bad debt.
3. Better collection services
As a policyholder, we will give you access to our expert advice on collection techniques you may utilise. In addition, you will benefit from lower legal costs through the improved buying power of collection services.
4. Increased ability to secure funding
Your accounts receivable is not a secure asset until it is paid. If you insure your debt however, this large, risky asset becomes more secure. Financial institutions such as banks and other lenders, will see this and our enhanced financing mechanisms as added security. Therefore, you will be in a better position to secure funding for your company, and in turn, grow it. With all conditions being met, a domestic trade credit insurance policy with us, may be used as a trade finance tool.
5. New market opportunities
Two major advantages of your policy with Credit Guarantee are that, you can take advantage of increased market penetration and the development of new markets in different industries. We provide the cover that enables your business to take on new challenges and expand into new markets, and grow your turnover with utmost confidence.
6. Grow your company and take on economic growth
According to a report by Xero1, getting paid on time is the number one financial challenge for half of South Africa’s small business owners. Trading locally comes with a number of challenges that may increase your exposure to the potential of payment defaults. In addition, the uncertain economic climate has business owners perturbed about extending credit to potential clients and the future of their businesses.
Your policy gives you the confidence to extend trade credit to new customers, helps improve the quality of your company and supports profitable growth, all while minimising the risk of sudden or unexpected customer payment defaults.
Even though the country may be undergoing junk status, Credit Guarantee enjoys stellar credit ratings of AA+. We have a high claim paying ability that your company needs to continue to grow in current South Africa.
At Credit Guarantee, we provide quality domestic trade credit insurance that allows your company to take on local markets with confidence.
Get covered and protect your bottom line today with domestic trade credit insurance from Credit Guarantee.
